European SME Week, 6-14 May 2009

Vilmos BudavariDG Enterprise and Industry

6 May 2009, Pula

Supporting SMEs: European Commission policies

and instruments

Contents

• SMEs in Europe• ‘Small Business Act’ for Europe• Competitiveness and Innovation

Framework Programme (CIP)• CIP financial instruments• Other services and tools supporting

SMEs• Contacts and Web links

SMEs in Europe

EU and SMEs

• SMEs: firms with <250 employees and annual turnover of less than €50 million and/or annual balance < €43 million Small < 50 employees; Micro < 10 employees.

• 23 million SMEs in EU (99% of all enterprises). They account for about 67% of total employment.

‘Small Business Act’for Europe

‘Small Business Act’ for EuropeWhy?

• To improve the overall policy approach to entrepreneurship.

• To irreversibly anchor the “Think Small First”principle in policy-making.

• To promote SMEs’ growth by helping them tackle the remaining problems.

What does it include?• A package of concrete measures (legislative and

non-legislative).• A set of politically binding principles.

Legislative measures

• General Block Exemption Regulation on State Aids

• Regulation providing for a Statute for a European Private Company

• Directive on reduced VAT rates (locally supplied services)

In addition as part of the SBA:

• A legislative proposal to simplify rules on VAT invoicing

• An amendment to the Late Payments Directive

Non legislative measures include

• “SME test” to analyse impact of legislation on SMEs and specific measures for SMEs

• “Erasmus” for young entrepreneurs and for apprentices

• Easier access to finance: EIB funds for mezzanine finance

• Code of best practices on SMEs access to Public Procurement

• SME Week in Spring 2009

10 politically binding principles

1. Create an environment for entrepreneurs and family businesses to thrive and entrepreneurship to be rewarded.

2. Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance.

3. Design rules according to the “Think Small First” principle.4. Make public administrations responsive to SMEs’ needs.5. Facilitate SMEs’ participation in public procurement and a better use of

State Aid possibilities for SMEs.6. Facilitate SMEs’ access to finance and support timely payments in

commercial transactions.7. Help SMEs to benefit more from the opportunities offered by the Single

Market.8. Promote the upgrading of skills in SMEs and all forms of innovation.9. Enable SMEs to turn environmental challenges into opportunities.10. Encourage and support SMEs to benefit from the growth of markets.

CIP

CIP structure - 3 pillars

Entrepreneurship &Innovation

(EIP)

€ 2 166m incl.€ 1 130m for fin.instruments€ 430 m for eco-innovation

ICTPolicy(ICT)

€ 728 million

IntelligentEnergyEurope

(IEE)

€ 727 million

SMEs

Eco-technologies

CIP financialinstruments

• Most important factors influencing SME growth: fiscal and social legislation and access to finance

• Banks are the financial institutions thatSMEs use most

• Most frequently used types of financing are leasing and overdrafts

• Only a few SMEs use venture capital

General remarks on SMEs’ access to finance in Europe

CIP financial instruments 2007-2013

Capacity Building Scheme (CBS)- Seed Capital Action �

SME Guarantee Facility (SMEG)- SME loan guarantee �- Microcredit guarantee �

- Equity and mezzanine guarantee �

- Securitisation of SME debt finance portfolios �

High Growth and Innovative SME Facility (GIF)- Venture Capital funds :

• Early stages �

• Expansion stages for innovative companies �- Co-investment in funds and investment vehicles promoted by

business angels �

Competitiveness and Innovation Framework Programme 2 007-2013

Access to finance

Formal Venture Capital Funds

Bank Loans & Guarantees

Entrepreneurs, Friends, Family

Business Angels

Public Stock Markets

HIGHER RISK LOWER RISK

SME development stage

Valley of Death

Seed & Early Stage Venture Capital Funds

Seed phase Start-up phase Emerging growth Development

Net

reve

nue Venture capital instrument (GIF) Guarantee instrument (SMEG)

High Growth and Innovative SME Facility (GIF)

• The objective of GIF is to reduce the venture capital market gap faced by SMEs.

• The focus of GIF is on innovative SMEs with high growth potential.

• Two windows: GIF1 and GIF2.

SME Guarantee Facility (SMEG)

• SMEG will improve access to finance for SMEs by providing counter- or co-guarantees to guarantee schemes or direct guarantees to financial intermediaries.

• Four windows:� SME loan guarantee;

� Microcredit guarantee;� Equity and mezzanine guarantee;

� Securitisation of SME debt finance portfolios.

Capacity Building Scheme (CBS)

•The Seed Capital Action will provide grants to selected funds for the long-term recruitment of additional staff with specific expertise.

How do the instruments work?F

un

din

g s

ou

rces

European Investment Fund (EIF)

Venture capital investment

in SMEs

Lending to SMEs

EIF selects its financial intermediaries based on competence. The criteria are public.

Guarantee fundsCapacity building

Venture capitalinvestments

Other investors

CIP budget

Venture capital

fund Bank

Guarantor

Other services and toolssupporting SMEs

EEN - Enterprise Europe Network• EU network offering services to the benefit

of SMEs� Organizing business cooperation across

borders� Help with accessing EU projects and

funding� Advising on EU legislation, standards and

intellectual property rights� Assisting SMEs in raising their innovative

capacities � Providing support to going international� Collecting SME feedback to legislative

initiatives� List of partners in Croatiawww.enterprise-europe-network.ec.europa.eu/info/countries/croatia_en.htm

� More than 600 partners

� Active in 40 European countries

� Several partners in Croatia

Your Europe - Business

theoreticalinformation

practical information: programmes/instruments

practical information: assistance

reference to legislation

access to national information

Features

• Enhanced multilingual businessinformation

• For companies doing business in another country

• Providing constant updates

• Offering practical information and access to national on-lineservices

• Through cooperation betweenEuropean Commission (ENTR-DIGIT) and Member Statesauthorities

SME Envoy

• Internally: « Watchdog function » to monitor Commission policies affecting SMEs

• Externally: Dialogue with SMEs and their representatives, both at national and European level

• Inform SMEs and gather their feedback on EU legislation, programmes and policies

• Monitor the implementation of the SBA

Contacts & Web links

Web links• Policy on access to finance

� http://europa.eu.int/comm/enterprise/entrepreneurship/financing/� http://ec.europa.eu/enterprise/entrepreneurship/financing/publications.htm

• ‘Small Business Act’ for Europehttp://ec.europa.eu/enterprise/entrepreneurship/sba_en.htm

• Competitiveness and Innovation Framework Programme� http://ec.europa.eu/cip/index_en.htm

• EU financial instruments� europa.eu.int/comm/enterprise/entrepreneurship/financing/financial_instruments.htm � http://access2finance.eu

• European Investment Fund� http://www.eif.org

• European portal for SMEs� http://ec.europa.eu/enterprise/sme/index_en.htm

• Enterprise Europe Network� http://www.enterprise-europe-network.ec.europa.eu/index_en.htm

• Your Europe for business� http://www.ec.europa.eu/youreurope/hav/en/business/

Entr-sme-envoy@ec.europa.euFax : +32.2.29.94143