GUIDE ON ACCESS TO FINANCE FOR SMEs SMEs The most important pillar for EUs future economic health The contents of this document have been selected at the discretion of BANCO SANTANDER, S.A., and it is not the goal of this entity to conduct a thorough review of the content in it, nor to present a complete review of them, therefore leaving no chance of claims against BANCO SANTANDER, S.A. or liability arising from the use that anyone can make of the provided information. 1
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GUIDE ON ACCESS TO FINANCE FOR SMEs
SMEs
The most important pillar for EUs
future economic health
The contents of this document have been selected at the discretion of BANCO SANTANDER, S.A., and it is not the goal of this entity to conduct a thorough review of the content in it, nor to present a complete review of them, therefore leaving no chance of claims against BANCO SANTANDER, S.A. or liability arising from the use that anyone can make of the provided information.
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GUIDE ON ACCESS TO FINANCE FOR SMEs
Santander Group – 2
Table of Contents
I. Introduction .................................................................................................................... 3
II. Main Funding Opportunities available to European SME’s .............................................. 5
1. Market information . .................................................................................................... 5
8. Starting up and growing phase (all economic sectors). ............................................... 17
9. All economic sectors: European investment bank loans .............................................. 20
III. Internationalisation of SMEs ....................................................................................... 21
IV. Contracts and grants ................................................................................................... 21
V. ANNEX I ......................................................................................................................... 23
VI. ANNEX II ..................................................................................................................... 25
GUIDE ON ACCESS TO FINANCE FOR SMEs
Santander Group – 3
I. Introduction
The 23 million SMEs in the EU represent 99% of businesses, and are a key driver for economic growth,
innovation, employment and social integration. The European Commission aims to promote successful
entrepreneurship and improve the business environment for SMEs, to allow them to realise their full
potential in today's global economy.
This guides aims to constitute an easy way to navigate through all the EU initiatives and actions to
improve SME’s access to finance.
A description of all initiatives and programs is provided as well a direct link to the main official websites
where you will be able to increase your knowledge on each specific program.
The EU, concerned about the decisive role SMEs play in the European economy has developed different
initiatives to promote their access to funding and their internationalization.
In order to facilitate the comprehension of all the measures and opportunities, the information has been
organized as follows:
- Funding opportunities by areas: market information; environment; energy efficiency and
renewable energy; innovation, new markets, new technologies and general research;
nuclear energy; coal and steel; cooperation; starting up and growing phase
- SMEs Internationalization programs
- Contracts and grants
Main EU programmes for SMEs PROGRAMME BUDGET1
Market information
Enterprise Europe Network (EEN)
Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME)
€2.5bn (2014-2020)
Environment
LIFE + Environmental Programme
€3.2 bn (2014-2020) Energy efficiency, renewable energy
The Intelligent Energy Europe Programme (IEE)
€730 million (2014-2020)
Innovation, new markets, new technologies, general research
The Information Communication Technologies Policy Support
1 On September 18th, the European Commission proposed adjustments to its proposal for the 2014 EU budget increasing the funding possibilities for several programmes in 2014 –by €30 million for COSME and by €200 million for Horizon 2020 (programme for research and innovation). http://europa.eu/rapid/press-release_IP-13-840_en.htm
The Entrepreneurship and Innovation Programme (EIP)
Ideas - Basic research at the frontiers of science
People - Training and career development of researchers
Capacities - Helping develop the capacities that Europe needs to be a thriving knowledge-based economy
KICs (Knowledge and Innovative Communities)
European Regional Development Fund (ERDF)
European Social Fund (ESF)
€1.3bn (2014-2020)
€1bn (2014-2020)
€7.5bn (2014-2020)
€4.75 bn (2014-2020)
€4,1 bn (2014-2020)
€135 million (2014-2020)
Nuclear energy
Euratom programme (2014-2018)
€1.7 bn (2014-2018) Coal and steel
Research Fund for Coal and Steel (RFCS)
€55 million (per year) Cooperation and collaboration
Cooperation Programme
€33 bn (2007-2013*) Starting up and growing phase
EIP (See Innovation, new markets, new technologies, general research)
Joint European Resources for Micro and Medium Enterprises (JEREMIE)
Joint Action to Support Micro-finance Institutions in Europe (JASMINE)
Future Internet Public-Private Partnership (FI-PPP): Third phase
Microfinance
EU-backed loans for small businesses
Equity capital
Guarantees
€100 million (2014-2015)
All sectors – European Investment Bank loans
Finance for SMEs and midcaps companies
€13 bn (2011*)
Internationalisation of SMEs
Your Europe, your opportunity
EU Gateway Programme – Japan and Japan
Business outside the EU
- Accessing non-EU markets - Candidate countries - Mediterranean and Eastern Neighbour countries - Asia - South America
Contracts and grants
GUIDE ON ACCESS TO FINANCE FOR SMEs
Santander Group – 5
II. Main Funding Opportunities available to European SMEs
The European Union provides support to European SMEs. This is available in different forms such as grants, loans and, in some cases, guarantees. Support is available either directly or through programmes managed at national or regional level. SMEs can also benefit from a series of non-financial assistance measures in the form of programmes and business support services. Along this document we will take a look at the more relevant financing sources sorted by area:
1. Market information (overcoming legal obstacles, identifying potential business
partners across Europe and more).
Enterprise Europe Network. (EEN).
http://een.ec.europa.eu/
The EEN comprises about 600 partners in 49 helping to increase the competitiveness of EU businesses. It provides a wide
range of services to SMEs and entrepreneurs, among others, helping them to access market information, overcome legal
obstacles and identify potential business partners across Europe, including innovation support and transnational
technology transfer services.
The EEN helps enterprises in these areas:
Develop your business in new markets Source or license new technologies Access EU finance and EU funding
Background:
The EEN makes part of the Entrepreneurship and Innovation Programme (EIP), which is part of the Competitiveness and
Innovation framework Programme (CIP) (2007-2013). For the period 2014-2020 the CIP will work under the Programme
for the Competitiveness of Enterprises and SMEs (COSME) and the EEN will continue working.
What is the CIP?
Created by the EU and with SMEs as its main target, the CIP supports innovation activities, provides better access to
finance and delivers business support services in the regions.
The CIP provides support for innovation through a series of initiatives and actions aimed at providing financial support to
innovators, innovation support services for SMEs, developing and testing new forms of business support and by
facilitating transnational benchmarking and cooperation with a view to mobilising more resources for innovation and to
adopting best practices in innovation policy-making.
4. Innovation, new markets, new technologies, general research (health, energy,
transport…)
The Information Communication Technologies Policy Support Programme (ICT-PSP) to which approximately €1,3
has been allocated.
http://ec.europa.eu/cip/ict-psp/index_en.htm
It aims to stimulate the new converging markets for electronic networks and services, media content and digital
technologies. It also supports the modernisation of public sector services that will raise productivity and improve
services.
Background:
The ICT programme is one of the three programmes under the Competitiveness and Innovation framework Programme
(CIP) (2007-2013) and it will continue under the COSME (2014-2020).
The Entrepreneurship and Innovation Programme (EIP). The Entrepreneurship and Innovation Programme seeks
to support innovation and SMEs in the EU. It counts with a budget of over 1 € bn.
http://ec.europa.eu/cip/eip/index_en.htm
Access to finance
The 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.
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.
o Equity Financing: The High Growth and Innovative SME Facility (GIF). It provides:
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%.
o Guarantees: The SME guarantee facility (SMEG). Working with the EIF it provides loan guarantees to
encourage banks to make more debt finance available to SMEs. SMEs wishing to apply for guaranteed financing should contact one of the financial intermediaries that have signed an agreement with the EIF.
The Structural Funds (European Regional Development Fund [ERDF] and European Social Fund [ESF]) are the largest Community funding instruments benefiting SMEs. The decentralised management of Structural Funds implies that they are available through the Members States and regions and do not fund projects directly from Brussels. Funds are administered at national/or at regional level. Applications should therefore not be sent to the European Commission but to the ERDF or ESF managing authority in your region or country. Another crucial aspect of Cohesion Policy funding is the fact that EU financial support always runs alongside national public or private financing. The level of EU intervention is linked with the situation on the ground. Depending on a number of socio-economic factors, the co-financing vary between 50% and 85% of the total cost of interventions.
The European Social Fund provides support for anticipating and managing economic and social change, with a number of opportunities for supporting SMEs. In the new programming period 2014-2020 the ESF will be targeted on four thematic objectives, the first three being directly linked with SME and entrepreneurship policies:
Promoting employment and supporting labour mobility.
Promoting social inclusion and combating poverty.
Investing in education, skills and life-long learning.
Enhancing institutional capacity and efficient public administration.
Businesses, non-profit organisations and public authorities will receive support to help them adapt to technological change, shift towards a low-carbon economy, keep up with global competition and implement reforms.
Direct actions of the Joint Research Centre 656 Million €
6. Coal and steel
RESEARCH FUND FOR COAL AND STEEL (RFCS)
Every year around € 55 million is made available to universities, research centres and private companies to fund projects. This programme focuses on research projects in coal and steel sectors.
7. Cooperation, collaboration
Cooperation - Fostering collaboration among research entities from academia and industry and research
institutes to gain leadership in key technology areas.
8. Starting up and growing phase (all economic sectors).
The Entrepreneurship and Innovation Programme (EIP). The Entrepreneurship and Innovation Programme seeks
to support innovation and SMEs in the EU. It counts with a budget of over 1 € bn.
http://ec.europa.eu/cip/eip/index_en.htm
Access to finance
The 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.
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. (See pag.7)
Joint European Resources for Micro and Medium Enterprises (JEREMIE) JEREMIE is a joint initiative of the European Commission and the European Investment Fund with the European Investment Bank. It aims to improve access to finance for micro to medium sized enterprises and in particular the supply of micro-credit, venture capital finance or guarantees and other forms of innovative financing. Special emphasis is given to supporting start-ups, technology transfer, technology and innovation funds and micro-credit. JEREMIE is managed as an integral part of the European Regional Development Fund, and projects are selected at the relevant national and regional level. http://eif.europa.eu/jeremie/ http://ec.europa.eu/regional_policy/funds/2007/jjj/jeremie_en.htm To access financing, locate national/regional managing authorities who can inform you about how to obtain financing in your country or region via the JEREMIE facility: http://ec.europa.eu/regional_policy/manage/authority/authority_en.cfm
Joint Action to Support Micro-finance Institutions in Europe – JASMINE JASMINE is a joint initiative of the European Commission and the European Investment Fund together with the European Investment Bank, and complements the JEREMIE initiative. It aims to develop the supply of micro-credit in Europe by means of two main actions: by providing technical assistance to micro-finance institutions in order to help them to be credible financial intermediaries and to obtain capital more easily; and by financing the activities of non-bank financial institutions to enable them to make a higher number of loans. The aim of the programme is to improve the access to finance of small businesses, unemployed people, or people not currently in employment who would like to become self-employed but who are unable to access traditional banking services.
This programme was launched in 2008 with a three-year pilot phase, with an initial capital of €50 million. http://ec.europa.eu/regional_policy/funds/2007/jjj/micro_en.htm http://www.eif.org/what_we_do/microfinance/JASMINE/index.htm
Future Internet Public-Private Partnership (FI-PPP): Third phase. The Future Internet Public-Private Partnership is a program set up by the European Commission and European industry
to make the business operations on several domains smarter, and to increase competitiveness of European technology
providers. The 5-year program is implemented via 3 phases. The third phase, which starts now, counts with a capital of
€100m euros
The objective of the third phase of the FI-PPP is to provide and run a stable infrastructure for the large scale trials and expand the Generic Enablers, and to involve through open calls SMEs and web entrepreneurs as developers of innovative, data-rich services and applications, building on Use Case platforms and the Generic Enablers. Here we focus only on the second objective.
How does phase 3 work?
This objective calls for projects with participants that can rapidly connect to existing communities of small and innovative ICT developers, i.e., SMEs and Web entrepreneurs, to take-up Future Internet technologies developed in previous phases.
Typically projects will bring together partners providing the full ecosystem to successfully involve the SMEs and Web entrepreneurs called to participate.
Project participants will have to demonstrate their financial viability to receive and manage funds at the level requested, as well as their expertise and capacity in developing and managing the full life-cycle of the open-calls transparently.
The main task of the projects is to scope, organise and manage open calls for small and innovative ICT players such as SMEs and Web entrepreneurs to develop services/applications that present a clear societal and economic value while exceeding a defined minimum level of functional complexity.
At least 80% of the project budget should be reserved for open calls for SMEs and web-entrepreneurs. Projects must publish widely their open calls and adhere to FP7 standards with respect to evaluation, conflict of interest and confidentially. Projects must also promote widely the participation in their open calls. SMEs and Web entrepreneurs that are successful in the open calls will be granted financial assistance which is typically in the order of EUR 50.000-150.000.
To learn more about the Future Internet Public-Private Partnership (FI-PPP), please check this website: http://cordis.europa.eu/fp7/ict/netinnovation/call3short_en.html
Microfinance The EU supports individuals facing uncertainty in the job market who wish to set up their own micro-enterprise or opt
for self-employment through the European Progress Microfinance Facility.
Microfinance is able for entrepreneurs or a micro-enterprise with up to 10 employees that are looking for a micro-loan
below € 25.000.
The European Investment Fund [General information on page 8] does not provide direct financing to entrepreneurs. It indirectly
supports SMEs by working with a wide range of financial intermediaries (banks, guarantee, microfinance institutions,
private equity and venture capital funds, etc) that provide a wide range of financial products to SMEs
The financial intermediary will inform the entrepreneur about specific application requirements and procedures, varying accordingly to each local market. You can benefit from more than one micro-credit under the initiative.
EU-backed loans for small businesses The European Union (EU) supports financing for SMEs to help their business startup or develop through the EU Competitiveness and Innovation Framework Programme (CIP Programme 2007-2013). List of EIF financial intermediaries providing loans and venture capital to SMEs: http://www.accesstofinance.eu
Equity capital If a SME wish to apply for an equity investment it should submit its investment proposal and business plan directly to the private equity and venture capital funds that have signed an agreement with the EIF. These funds make investment decisions based on normal commercial criteria. List of these intermediaries split by country: http://www.eif.org/what_we_do/where/index.htm VENTURE CAPITAL IN EU LATEST DEVELOPMENTS
There are currently several initiatives being negotiated at EU level that seek increase access to finance by SMEs:
European Venture Capital Funds Regulation (EVCFR)
The EVCFR is an important step towards simplifying cross border fundraising. It consists of a voluntary passport which funds can apply for. In order to get it they have to abide by certain uniform rules and requirements.
Long term financing of the European economy
Long-term investment represents spending that enhances the productive capacity of the economy. This can include energy, transport and communication infrastructures, industrial and service facilities, climate change and eco-innovation technologies, as well as education and research and development. Europe faces large-scale long-term investment needs, which are crucial to support sustainable growth. To fund long-term investment, governments, businesses and households need access to predictable long term financing.
If you wish to apply for guaranteed financing you should contact one of the European Investment Funds (EIF) financial intermediaries in your country that signed up an agreement with the EIF under the CIP Programme. Please refer to http://www.accesstofinance.eu for more information.
9. All economic sectors: European investment bank loans
http://eib.europa.eu/projects/topics/sme/index.htm?lang=en All autonomous SMEs with fewer than 250 employees in the 27 EU Member States are eligible, as are MidCaps (autonomous enterprises with less than 3,000 employees). The subsidiaries or holding companies of groups with more than 250 employees are not eligible. All economic sectors are eligible except for a limited number of exclusions:
Ammunition and weapons, military/police equipment or infrastructure Projects which result in limiting people's individual rights and freedom, or violation of human rights. Projects unacceptable in environmental and social terms Ethically or morally controversial projects Activities prohibited by national legislation (only where such legislation exists)
During 2011, the EIB Group provided EUR 13 billion of finance for SMEs and midcaps companies. Overall more than 120 000 SMEs received EIB Group support across Europe last year. EIB loans for SMEs are channelled through commercial banks. The duration of the loans will be between 2 and 12 years, with a maximum amount of €12.5 million per loan. Between 2009 and 2011 signatures of EIB loans for SMEs and midcaps with intermediary banks between have reached some EUR 33 billion. More than 180.000 enterprises received finance from the EIB during this three year period.
III. Internationalisation of SMEs Many of the programmes focus on SME’s internationalization do not provide direct funding to SMEs but to intermediaries, such as Public Administrations, active supporting SMEs in their internationalisation process. Your Europe, your opportunity Practical guide to doing business in Europe. http://europa.eu/youreurope/business/index_en.htm EU Gateway Programme – Japan and Korea Opportunities for EU Companies in Japan and Korea http://www.eu-gateway.eu Business outside the EU Different EU programmes, networks and information sources are available to face the challenge involved in entering global markets. Specific programmes are available for the following geographic areas:
- Accessing non-EU markets - Candidate countries - Mediterranean and Eastern Neighbour countries - Asia - South America
Part of the EU budget is allocated to companies and organisations in the form of calls for tender, grants or funds and
other financing programmes.
Contracts
The European Commission issues calls for tender in order to select the providers to buy goods and services - studies,
technical assistance and training; consultancy, conference and publicity services; books and IT equipment etc.
EC Practical Guide on contracting procedures http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm Public contracts by EU policy http://ec.europa.eu/contracts_grants/contracts_en.htm
Grants Grants are direct financial contributions from the EU budget to support projects or organisations which promote the interests of the EU or contribute to the implementation of an EU programme or policy. Grants, funds and programmes by EU policy http://ec.europa.eu/contracts_grants/grants_en.htm