Smaller Cities' Access to External Finance

The aim of this study is to identify practical challenges of and solutions to smaller cities accessing external finance.

External finance only holds a small percentage of cities’ overall investment finance across the EU. According to the 2017 Investment Survey of the European Investment Bank (EIB), it only represents 18% of municipalities‘ investment finance, including National Promotional Banks (NPB). Overall, municipalities resort mainly to own resources. Yet, many investments are economically viable and thus well-suited for external finance. Moreover, commercial bank loans interest rates are relatively low as compared to previous years. So, what hinders smaller municipalities to access commercial bank loans, funds and other types of external financing?