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COSME to spur access to credit for small enterprises

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The European Commission is dedicated to helping Europe’s small and medium-sized enterprises (SMEs) overcome the financing problems currently plaguing Europe. This is the inspiration behind a new programme called COSME (Competitiveness of Enterprises and SMEs), which will free up funding for SMEs and help small businesses – the backbone of Europe’s economy – create goods, services and jobs. In an interview with E and I Magazine, Vice-President Antonio Tajani explains what the Commission hopes to achieve with COSME.

E&I: In short, what is COSME?

Tajani: COSME is the EU’s new programme dedicated to SMEs, which provide 85 % of all new jobs in the EU. It is a fact: Ambitious entrepreneurs have a harder time in Europe than in some other parts of the world, particularly when it comes to getting credit. Therefore, COSME is foremost a funding instrument that will improve access to finance for SMEs and improve access to markets inside and outside the EU. The funds will also be used to create a favourable environment for SMEs by encouraging an entrepreneurial culture in Europe and strengthening the sustainable competitiveness of EU enterprises. The programme is set to run from 2014 to 2020, with a budget of €2.3 billion.

E&I: How will the financial support work?

Tajani: COSME aims to facilitate SMEs’ access to finance. To this end, nearly €1.4 billion of the COSME budget is allocated to loans and venture capital complementing financial schemes at national level. In particular, COSME will provide a guarantee facility for SME loans up to €150 000, and offer better access to venture capital through an equity facility, with a particular focus on the expansion and growth phase of SMEs. The allocation of these funds will be managed by reputable financial intermediaries, such as banks, mutual guarantees and venture capital funds. SMEs can access these funds through an EU-supported finance portal.

E&I: What does COSME mean for an SME in practicable terms?

Tajani: COSME will work like its predecessor, the Competitive and Innovation Framework Programme (CIP). Under the CIP, loan guarantees were used in cases where the entrepreneur or the small enterprise did not have sufficient collateral and the bank did not provide a loan. Ninety percent of the beneficiaries – including about 200 000 SMEs from across Europe – had 10 or fewer employees. This is precisely the category that has the most difficulties getting a loan. But thanks to the CIP, the average guaranteed loan was about €65 000, and by the end of December 2012, the financial instruments of the CIP had mobilised almost €13 billion in loans and more than €2.3 billion in venture capital. The same sort of benefits will be realised under COSME.

E&I: How many businesses will profit?

Tajani: It is expected that by 2020, around 344 000 firms will receive loans backed by COSME guarantees, with the value of lending reaching €22 billion. In addition, thanks to COMSE’s investments in venture capital funds supporting fast-growing SMEs, 560 firms will receive venture capital investment with the overall volume invested reaching €4 billion.

E&I: What will the economic impact be?

Tajani: The impact will be enormous. We expect that one euro invested in a loan guarantee for SMEs will mobilise between 20 and 30 additional euros. The ratio for venture capital is expected to be between four and six. COSME-backed financial instruments should result in an annual increase of €3.5 billion in additional lending and/or investment for EU companies. Each year, COSME is expected to contribute to an increase in the EU’s GDP by €1.1 billion, and assist 40 000 firms in creating or saving 30 000 jobs and launching 1 200 new business products, services or processes.

E&I: What other support is foreseen for SMEs as part of COSME?

Tajani: The remaining €1 billion of the COSME budget will maintain many of the same successful programmes already in place, including co-financing for the European Enterprise Network, with its more than 600 offices in the EU and beyond. COSME will also support internationalisation of SMEs, Erasmus for Young Entrepreneurs, entrepreneurship education, IPR Helpdesks and the reduction of administrative burdens.


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