The European Commission’s schemes to increase access to finance have helped European enterprises navigate the crisis. The main framework programme for 2007-2013, CIP, facilitated more than €17 billion in loans and venture capital to SMEs. Now, with 2014 welcoming the start of COSME – a new programme specifically designed to better serve SME needs – Europe’s small businesses will have the financing they need to thrive.
With more than one-third of Europe’ssmall and medium-sized enterprises (SMEs) struggling to obtain necessary loans, European Commission Vice-President Antonio Tajani is leading the effort to increase support for European SMEs.
The European Commission has indeed already launched proactive measures to spur growth. One of the main programmes – the Competitiveness and Innovation Framework Programme (CIP) – facilitated more than €15 billion worth of loans and €2.4 billion in venture capital to more than 275 000 SMEs between 2007 and 2013.
The Competitiveness of Enterprises and SMEs (COSME) programme follows in the footsteps of CIP. As part of the EU multiannual financial framework 2014-2020, COSME is expected to respond even better to SME needs. To that end, COSME is the first EU programme devoted entirely to supporting small businesses.
In addition to unlocking financial opportunities, COSME’s €2.3 billion budget will increase access to foreign markets, improve the business environment and support entrepreneurs. Funding will be spread throughout the EU’s multitude of financial instruments designed to catalyse investments – loans, guarantees, equity and other risk-bearing mechanisms.
Thanks to the May 2013 launch of the EU finance portal, finding banks and venture capital funds that provide finance supported by the EU has never been easier. The user-friendly portal provides information in 24 languages on all EU financial instruments available to SMEs, including the contact details of more than 1 000 EU-supported banks and other financial institutions.
Nearly €1.4 billion of the COSME budget is allocated to loans and venture capital complementing financial schemes at national level. Between 220 000 and 330 000 businesses are expected to receive such support by 2020. COSME is also expected to mobilise €14 to €21 billion in loans and guarantees, and between €2.6 and €3.9 billion in venture capital investments.
In addition, COSME will provide a guarantee facility for SME loans up to €150 000, and offer better access to venture capital through an equity facility targeted specifically at 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 the access to finance portal (see box). The decision to provide a loan, guarantee or venture capital/equity financing will be made by the local financial institution, as will the amount, duration, interest rates and fees.
Complementing COSME, the Horizon 2020 programme has €2.7 billion allocated to providing financing to research- and innovation-driven businesses, including SMEs. The two initiatives work together, targeting different stages of a company's development: While the overall aim of COSME's equity facility is to support growth-oriented companies that want to expand their business and/or internationalise, Horizon 2020's equity facility focuses on closing the market gap in the early stages of a company's development and providing a seamless stream of financing from the research phase to prototyping and commercialisation.
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