The JEREMIE (Joint European Resources for Micro to Medium Enterprises) facility for Andalusia is helping stimulate innovation, competitiveness and growth among SMEs faced with difficulties accessing finance.
- 22 August 2011
Projects such as this are helping the EU to become a smart, sustainable and inclusive economy by 2020, as set out in the EU 2020 growth strategy. The EU is facing some tough challenges, including an ageing population, an insufficiently qualified workforce, the need for greater innovation, striking a balance between economic growth and environmental degradation, and ensuring secure, clean energy supplies. Regional policy projects across the EU are playing an active role in dealing with these and many other challenges, by undertaking projects designed to generate employment, raise educational achievement, develop renewable energy sources, boost productivity and give all citizens access to opportunities. The projects and the regions play a pivotal role in this, as they generate real results that contribute to achieving the strategy’s key goals.
Using its leverage effect to attract private capital, each JEREMIE euro is expected to ultimately generate between two and 10 euro.
Instrumental tool for Andalusian business
JEREMIE is a partnership between the European Commission, European Investment Bank and European Investment Fund (EIF), which recognise how important securing credit is for entrepreneurship, competitiveness, innovation and growth.
The JEREMIE revolving fund has two strands: a Risk Capital Fund (total cost €20 million) and a Multi-instrument Fund (€185 million) – the priority areas for intervention are human capital, globalisation, equity loans and guarantees. This form of financing is seen as more sustainable over the long term compared to one-off grants. It both helps bridge existing financial gaps in accessing credit for SMEs and enables the region to increase resources that can stimulate business growth.
The JEREMIE fund in Andalusia is being managed by the regional development agency ‘IDEA’, and is the largest such fund in Europe, with €235 million available.
Greater access to credit
In tough financial times, sustainable economic development and flexible, forward-looking policies are vital. Innovative financing schemes such as JEREMIE are now making it easier for SMEs to secure loans and helping start-ups and micro-enterprises gain access to secure money and support. JEREMIE helps multiply investment resources by combining grants and non-grant forms of finance to support SME growth. Support from other potential sources, including both the private and the public sector, is also encouraged. In Andalusia, this 'leverage effect' is expected to generate up to 10 additional euro for each 'JEREMIE' euro.
Another important feature is the use of holding funds, to which part of the allocation can be transferred. Financial intermediaries such as the EIF are bringing their experience and expertise to manage the holding funds. This process helps ensure a smooth flow of funds to other intermediaries such as venture capital funds, loan funds, guarantee funds and micro-credit providers. These in turn provide finance to SMEs in the form of equity investments, loans and guarantees.