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Irish SME's access to E25bn EU funds

Tuesday, July 22 11:54:58

Irish and other European small and medium-sized enterprises (SMEs) will soon have access to up to E25bn of additional finance.

That's because of an agreement signed today between the European Commission and the European Investment Fund (EIF). The signing ceremony of the agreement will be hosted by the newly-appointed Commissioner for Industry and Entrepreneurship, Ferdinando Nelli Feroci.

Thanks to the E1.3bn allocated in the COSME budget for SME financing, it will be possible to mobilise up to E25bn via leverage effects from financial intermediaries over the next seven years.

The agreement paves the way for providing equity and debt financing for SMEs under the EU Competitiveness of Enterprises and SMEs (COSME) programme by the end of 2014.

Following the signature of the agreement, the EIF will open a call for expression of interest to which eligible financial institutions (banks, guarantee institutions, funds etc.) can apply.

After a thorough due diligence process, the EIF will select financial intermediaries which can then make the new finance available to European SMEs across all sectors.

COSME will operate by way of funding guarantees for banks in order to help them provide more loans and finance leases to SMEs. The impact is substantial as, due to the leverage effect of the COSME Programme, E1 invested in a loan guarantee enables up to E30 of financing to SMEs. These guarantees will typically help many SMEs who might otherwise not be able to obtain funding due to lack of sufficient collaterals.

It is expected that up to 330 000 SMEs will receive loans backed by COSME guarantees, with the total value of lending reaching up to E21bn. Based on the experience of the COSME predecessor programme, the Competitiveness and Innovation Programme (CIP), it is expected that 90pc of the beneficiaries will have 10 or fewer employees with an average guaranteed loan of about E65,000. This is precisely the category of SMEs who currently face the most difficulties getting a loan.

Ferdinando Nelli Feroci, Commissioner for Industry and Entrepreneurship, said: "Thanks to COSME, European SMEs will soon have access to up to E 25bn in additional finance in the form of both loan guarantees and equity. This is an important part of the EU's response to overcome the well-known difficulties SMEs face in obtaining access to credit. The signing of this agreement today shows that the European Commission is firmly committed to help EU SMEs thrive: they are the back-bone of the EU economy, and are responsible for the creation of 85pc of all new jobs."

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