The European Commission helps small and medium-sized enterprises (SMEs) to overcome weaknesses in the financial markets by working with various financial institutions to provide them with funding.
This is done using EU financial instruments (see below) to increase the opportunities for small businesses to obtain finance from banks, through guarantee providers, and via venture capital funds.
The Commission also helps EU countries to share good policy on improving access to finances and to benefit from the experience of others in areas.
Initiatives exist in the areas of:
EU financial instruments are risk-sharing schemes such as guarantees backed by EU funds to financial intermediaries who provide lending, lease finance, or co-investments with venture capital funds.
This support is channelled through reputable financial intermediaries such as banks, lessors, mutual guarantee societies, microfinance providers, and venture capital funds, who are closer to the final beneficiaries and are well qualified to judge their needs.
Decisions to provide loans, guarantees, or venture capital are made by the local financial institutions. The exact financing conditions (such as the amount, duration, interest rate, and fees) depend on the financial institution.
EU financial instruments are market-driven – there are no country allocations and the availability of funding depends on the interest of local financial institutions taking part in the scheme. It is the financial intermediaries who create individual products suited to the needs of SMEs in their market.