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Financing Programmes for SMEs

01 October 2009
by inadim -- last modified 02 October 2009

The European Commission's DG ECFIN oversees programmes which provide access to finance for Small and Medium-sized Enterprises (SMEs). The day-to-day management of these activities is handled by major International Financial Institutions (IFIs).

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SMEs are the main source of employment and development in the European economies, but they often experience difficulties in gaining access to financing for their business. To alleviate these difficulties, the Commission has put in place a variety of programmes for SME financing through equity, loans, guarantees and grants.

The implementation of these activities is handled by the major IFIs (the European Investment Bank (EIB), the European Investment Fund (EIF), the European Bank for Reconstruction and Development (EBRD), and the Council of Europe Development Bank (CEB) in co-operation with the Kreditanstalt für Wiederaufbau (KfW)).

They consist of:

  • an SME Finance Facility (SMEFF)

    • The objective of the SMEFF is to encourage banks, leasing companies and investment funds to expand and maintain long-term financing of SME operations in the new Member States and certain applicant countries. The SMEFF is managed by the EIB, EBRD, CEB and KfW and consists of two so-called ‘windows’: a loan window providing credit lines from the IFIs combined with incentives for the participating lending institutions, and an equity window providing equity capital.

  • a High Growth and Innovative SME Facility (GIF)

    • The GIF is managed by the EIF on behalf of the European Commission and is part of the Competitiveness and Innovation Framework Programme, 2007-2013 (CIP). It comprises two ‘windows’:

    GIF 1, which promotes early-stage (seed and start-up) investments through specialised Venture Capital Funds. These provide capital to innovative SMEs and co-invest in funds and other investment vehicles promoted by business angel networks.

    GIF 2, which promotes expansion-stage investments through specialised risk capital funds providing equity or quasi-equity for innovative SMEs with high-growth potential.

  • an SME Guarantee Facility (SMEGF)

    • Also part of the CIP and managed by the EIF, the SMEGF has four ‘windows’: a loan window providing debt financing via loans or leasing; a microcredit window providing guarantees for funds which gives loans of smaller amounts and grants to partially offset high administrative costs; an equity window providing guarantees for equity or quasi-equity fund investments in SMEs; and a securitisation window providing securitisation of SME debt-finance portfolios.

  • a Capacity Building Scheme (CBS)

    • Again under the CIP, the CBS has two parts: a partnership action, which focuses on finance for eco-innovation; and a seed capital action managed by the EIF, which provides grants to venture capital funds to cover in part their start-up costs and for the long-term recruitment of staff with specific investment or technology expertise.

DG ECFIN also continues to monitor predecessor programmes, notably the Multi-Annual Programme for Enterprise and Entrepreneurship (2001-2006) and the Growth and Employment initiative (1998-2000). These programmes, by their very nature, will continue for another decade or so.

The programmes for SMEs’ access to finance are aimed at achieving the objectives agreed at the Lisbon Summit in 2000.

It is important to note that DG ECFIN does not provide direct financial support to individual businesses or entrepreneurs. Those interested should refer directly to the above-mentioned financial intermediaries if they wish to apply.

Funding opportunities available for SMEs

Source: European Commission