Quick guide to indirect funding
Indirect funding reaches the business via a bank or venture capital fund, and is designed to help finance regular business needs such as investments and tangible or intangible assets.
Small businesses often have difficulties finding private financing for seed money, start up, expansion or transfer. To fill this gap, the EU Commission provides complementary financing. The Commission:
- provides resources to banks, venture capital funds and guarantee institutions with a proven track records in financing SMEs
- provides guarantees and counter-guarantees for loans and mezzanine financing provided by banks to young and very small companies
- participates in venture capital funds investing in SMEs with growth potential, to strengthen their equity base.
The main sources of EU funding for indirect support are the Competitiveness and Innovation framework Programme (CIP) and the EU Structural Funds, including the JEREMIE initiative.
- The CIP financial instruments are managed on behalf of the European Commission by the European Investment Fund (EIF), which selects financial intermediaries such as banks and venture capital funds to work with. These financial intermediaries have to prove that the SMEs will benefit from an added value created by EU support, meaning that they take an additional risk in favour of the SMEs in comparison with their usual practices.
- The EU Structural Funds can be used by EU Member States/regions to support SMEs' access to finance. The extent to which such funds will be made available to SMEs is decided by the national/regional authorities, not by the European Commission. A part of the Structural Funds dedicated to SME finance is often used in financial instruments and distributed through financial intermediaries as described for the CIP above. The JEREMIE initiative helps the national and regional managing authorities for Structural Funds create such financial instruments with EIF help.
The European Commission's financial support for SMEs is complementing finance provided by the Member States/regions when addressing similar market gaps.
For national sources of SME financing, visit Your Europe - Business 
or contact your national partner under the Enterprise Europe Network.
