CIP Financial Instruments
The 2007-13 Competitiveness and Innovation framework Programme (CIP) has several schemes and a budget of over €1bn to facilitate access to loans and equity finance for SMEs where market gaps have been identified.
Each euro spent leverages an average €6 on risk capital or €30 on bank loans, which means it should generate some €30bn in new finance for SMEs from financial institutions and benefit up to 300 000 SMEs.
Under previous programmes over 360 000 SMEs have been helped by the €744m provided during the last decade.
The CIP financial instruments are implemented for the Commission by the European Investment Fund (EIF) on a trust basis. They cover different needs depending on the stage of development of the small business:
The high growth and innovative SME facility (GIF)
- risk capital for innovative SMEs in their early stages (GIF1): EIF can usually invest 10 to 25% of the total equity of the intermediary venture capital fund or up to 50% in specific cases;
- risk capital for SMEs with high growth potential in their expansion phase (GIF2): EIF can invest 7.5 to 15% of the total equity of the intermediary venture capital fund or, exceptionally, up to 50%.
SMEs wishing to apply for an equity investment need to contact the funds that have signed an agreement with the EIF. The list of funds is published on the Access to Finance website. An overview of this activity can be found in the EIF's venture capital website. These funds make investment decisions based on normal commercial criteria.
Financial institutions interested in participating in the programme should contact the European Investment Fund (EIF) that manages the instruments or visit its CIP venture capital website.
The SME guarantee facility (SMEG)
It provides loan guarantees to encourage banks to make more debt finance available to SMEs, including microcredit and mezzanine finance, by reducing the banks' exposure to risk. SMEG provides co-, counter- and direct guarantees to financial intermediaries providing SMEs with loans, mezzanine finance and equity. Four "windows" give access to funding for:
- loan guarantees - guarantees for loans to SMEs with growth potential
- microcredit - guarantees for loans of up to €25 000 to micro-enterprises with up to nine employees, particularly entrepreneurs starting a business
- equity and quasi-equity guarantees - guarantees to existing equity guarantee schemes and providers of mezzanine finance to support investments in businesses with up to 249 employees
- securitisation - guarantees to support securitisation structures to assist financial intermediaries in mobilising debt finance for SMEs.
SMEs wishing to apply for guaranteed financing should contact one of the financial intermediaries that have signed an agreement with the European Investment Fund. Details can be found on the Access to Finance website. An overview of this activity is available on the EIF's guarantees and securitisation website.
Financial intermediaries wishing to apply for these instruments can visit the EIF web pages on the SME guarantee facility.