The European Investment Fund (EIF) and Turkiye Sinai Kalkinma Bankasi (TSKB) have signed an agreement for small- and medium-sized enterprises (SMEs) as well as small mid-caps in Turkey under InnovFin, an EU finance for innovators.

The agreement will enable the TSKB, Turkey's first privately-owned development and investment bank, to provide loans to innovative companies in Turkey over the next two years with the support of a guarantee provided by EIF, according to a statement released Wednesday.

Istanbul-based TSKB is Turkey's first privately owned development and investment bank.

Commenting on the deal, EIF CEO Pier Luigi Gilibert said: "I am pleased to be signing the first InnovFin SME Guarantee agreement in Turkey."

The EU support for innovative Turkish companies is expected to generate a portfolio of 20 million euros in bank loans, according to Gilibert.

"The TSKB has ample experience working with international finance institutions and we are confident that they will be able to target innovative companies in Turkey with this EU support," he said.

The aim of the InnovFin SME Guarantee is to encourage banks or other financial institutions to lend to SMEs and small mid-caps (firms with fewer than 500 employees) in need of investment and/or operating capital to finance research, development, and innovation activities, with EU financial support.