European Fund for Strategic Investments adds firepower to COSME funding for SMEs
The European Commission has put the final measures in place to kick-start investment in the real economy. A package agreed today will ensure that the European Fund for Strategic Investments (EFSI) is up and running by early autumn 2015, keeping the ambitious timetable set by President Jean-Claude Juncker to implement the Investment Plan for Europe.
Part of this package includes enhancing funding opportunities under the COSME Loan Guarantee Facility (LGF) with the support of the European Fund for Strategic Investments. To make this happen, Ms. Marjut Santoni, European Investment Fund (EIF) Deputy Chief Executive and Mr. Daniel Calleja, Director-General of the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs signed an amendment today to the COSME Delegation Agreement. This will enable small and medium-sized enterprises (SMEs) to receive financing supported by the LGF earlier than was previously possible.
Elżbieta Bieńkowska, Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, said: "The Investment Plan for Europe has already started to deliver for SMEs. Indeed, there has been such strong market demand for COSME financing that we would not have been able to meet all financing opportunities in 2015. Thanks to a guarantee provided under EFSI, even before becoming fully operational, the European Investment Fund (EIF) will be able to bring forward in time the signature of transactions with financial intermediaries. Later this autumn, I will complement the financing aspects with a strategy to improve the business environment for investments. The Internal Market Strategy will be at the heart of the Investment Plan for Europe."
Background
To enhance funding opportunities under the COSME Loan Guarantee Facility (LGF) with the support of the European Fund for Strategic Investments (EFSI), the European Commission and the European Investment Fund (EIF) amended the Delegation Agreement. This will enable SMEs to receive LGF supported financing earlier than was previously possible.
European small and medium-sized enterprises (SMEs) benefit from financing support provided by COSME, the EU Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises. They specifically benefit from (counter-) guarantees provided by the Loan Guarantee Facility. The market response from financial intermediaries has been excellent and there is a very strong market demand for the LGF. However, COSME annual budgetary resources are limited and the 2015 budget has been almost entirely used-up.
The SME Window of EFSI will support existing COSME activities and will reinforce the implementation of the COSME Loan Guarantee Facility. The guarantee provided under EFSI will allow the EIF to sign a greater number of transactions with financial intermediaries earlier than would have been possible under the COSME budget alone. This will ensure COSME has a quicker positive impact, which will lead to further investments, growth and a faster economic recovery.
Due to the EFSI guarantee, the EIF could sign additional operations of up to €150 million in 2015, enabling the mobilisation of up to €3 billion of funding for SMEs. At the same time, the overall enhancement could reach up to €500 million (in the period from 2015 to 2019), enabling the mobilisation of up to €10 billion of funding for SMEs.
COSME financial instruments
COSME runs from 2014 to 2020 and has a planned budget of €2.3 billion, out of which €1.3 billion funds financial instruments. The COSME programme builds on the success of the Competitiveness and Innovation Framework Programme (CIP), which helped to mobilise more than €19.4 billion of loans and €3.1 billion of venture capital to over 370 000 SMEs in Europe between 2007 and 2013.
COSME is improving access to finance for SMEs through two financial instruments that have been available since August 2014. These financial instruments facilitate access to loans and equity finance for SMEs where market gaps have been identified.
Thanks to this budget, it will be possible to mobilise up to €25 billion in financing for SMEs from financial intermediaries through leverage effects. The financial instruments are managed by the European Investment Fund (EIF) in cooperation with financial intermediaries in EU countries.
How to access COSME financial instruments
If you are an SME or an entrepreneur looking for debt or equity finance and would like to see which financial intermediaries are working with COSME, please visit the Access to Finance portal.
If you are a financial intermediary, you can find more information on the calls for expression of interest for the COSME financial instruments below:
