Access to finance for SMEs through "EU financial instruments"
Improving access to finance for SMEs is crucial for entrepreneurship, competitiveness, innovation and growth. The European Commission focuses on reducing or removing market gaps, complementing Member States' measures and working with the market to stimulate the provision of debt and equity finance to SMEs. Getting a company off the ground or expanding it requires money, and raising the right kind of finance can be a major difficulty for SMEs. On the one hand, risk-aversion makes investors and banks shy away from financing start-up SMEs; on the other, the world of finance is often less accessible for SMEs than it could be and entrepreneurs sometimes have limited understanding of investors’ or banks’ concerns, making it even harder for them to find the financial backing they need.
Under the Entrepreneurship and Innovation pillar of CIP, there exist a number of financial instruments which aim to bridge this gap, helping SMEs to raise equity and debt finance. With a budget of over one billion Euros, the CIP financial instruments should leverage around 30 billion euros of new finance for SMEs. These Financial Instruments, include:
- High Growth Innovative Scheme: providing risk capital for innovative SMEs in their early stages (GIF1) and in their expansion phase (GIF2);
- SME Guarantee Facility (SMEGF): providing loan guarantees to encourage banks to make more debt finance available to SMEs, including micro-credit and mezzanine finance, by reducing the banks’ exposure to risk;
- Seed Capital Action and the Partnership Action: helping to reinforce the capacity of financial intermediaries to invest in and lend to SMEs.
These EU instruments target companies in different phases of their lifecycle: seed, start up, expansion and business transfer; and will support investments in technological development, innovation (including eco-innovation), technology transfer, and the cross border expansion of business activities. They are managed by the European Investment Fund (EIF) in cooperation with financial institutions.
For further information on access to finance, click here.
Factsheet CIP Financial Instruments can be downloaded here: