SME Access to Finance -

COSME

Technical Chamber of Greece

Athens, 6 October 2016

Martine Diss, Deputy Head of Unit

Unit H3: COSME Financial Instruments

European Commission, DG Growth

European Commission SME Policy

• Policy development: Small Business Act for Europe (SBA)

• SME dimension in Commission initiatives (Single Market Strategy, Better regulation, Capital Markets Union)

• SME access to funding programmes (COSME, Horizon 2020)

The “Small Business Act”

• Main objective: create a better business environment for SMEs based on the “Think Small First” principle

• 10 principles to be implemented at European and national level

• Governance and monitoring

Small Business Act principles

1. Support entrepreneurship

2. Give a 2nd chance (failure)

3. “Think Small First” (reduce burdens)

4. Public administration responsive to SME needs (e-government)

5. Improve access to public procurement & use of state aid

6. Facilitate access to finance

7. Benefit from Single Market opportunities

8. Access to skills and innovation

9. Eco-innovation/environment opportunities

10. Access to external markets

Monitoring SBA implementationSME Performance Review Greece 2015

SME DIMENSION IN CURRENT INITIATIVES

- Single Market Strategy

• VAT Action Plan

• Facilitate use of digital technologies

• Initiative on standardisation

• Modernising IPRs framework

• Better governance of public procurement

Start-up Initiative

• Public consultation to find out ways to support "potential" entrepreneurs closed in July

• Soon a Commission Proposal to address the issues which start-ups that are scaling up have in various fields, including on access to finance

• One of the core pillars: the European venture capital "fund of funds"

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Increase market-based finance from various sourcesand build stronger equity culture, in addition totraditional bank finance

Stimulate long-term finance for investments ininfrastructure and SMEs

Improve cross-border raising of capital andinvestments by removing barriers

Capital Markets Union – key goals

COSMEProgramme for the Competitiveness

of Enterprises and SMEs

• Strengthening the competitiveness and sustainability of European enterprises

• Encouraging entrepreneurship and promoting SMEs

• Main target audience: SMEs, Entrepreneurs, Business Support Organisations, regional and national Administrations

• Foreseen budget: € 2.3 billion from 2014 to 2020

ACCESS TO FINANCE

ACCESS TO MARKETS

FRAMEWORK

CONDITIONS

ENTREPRENEURSHIP

COSME specific objectives

Min 60% ~11,5%

~21,5% ~2,5%

EU: the most important problem

percentage of respondents that considered those problems as most important for their enterprise in the past six monthsData from "Survey on the Access to Finance of Enterprises (SAFE)"

December 2015, http://ec.europa.eu/growth/safe

Austria 7%

Belgium 9%

Bulgaria 8%

Croatia 16%

Cyprus 25%

Czech Republic 7%

Denmark 13%

Estonia 5%

Finland 7%

France 11%

Germany 7%

Greece 30%

Hungary 11%

Ireland 13%

Italy 12%

Latvia 9%

Lithuania 14%

Luxembourg 6%

Malta 12%

Netherlands 13%

Poland 8%

Portugal 11%

Romania 11%

Slovakia 8%

Slovenia 15%

Spain 11%

Sweden 12%

United Kingdom 9%

access to finance is the least pressing one… …but the situation differs between countries

access to finance as most important problem

SME finance trends

Rejected loanapplications

Interest rates(new loans≤€0.25m)

2015 H1 April 2016

France 10% 2.3%

Germany 5% 2.8%

Italy 8% 3.7%

Netherlands 25% 3.5%

Portugal 11% 4.3%

Spain 9% 3.1%

Greece 16% n.a.

Data from ECB & "Survey on the Access to Finance of Enterprises (SAFE)"December 2015, http://ec.europa.eu/growth/safe

Bank loan rejections(as % of total applications)

Euro area results (June 2016)

• Improvement in the availability of finance, fall ininterest rates and increase in the available size andmaturity of loans

• Increased willingness of banks to provide credit

• Still variations at national events: 31% of SMEs inGreece, 13% Italy versus 6% in Germany or 8% inFinland

• 30% of SMEs had applied for a loan and

o 68% (up from 66%) received the full amountrequested and

o 8% (down from 9%) were rejected

• discouraged borrowers declined slightly 6%, downfrom 7%

14SME Development Stages

DEVELOPMENT

HIGHER RISK LOWER RISK

Business Angels,

Technology Transfer

Microcredit

VC Seed & Early Stage

Portfolio Guarantees & Credit Enhancement

VC Funds, Lower Mid-Market & Mezzanine Funds

PRE-SEED PHASE SEED PHASE START-UP PHASE EMERGING GROWTH

Social Impact Funds

Public Stock Markets

Financing needsat every stage of their development

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EU financingat every stage of their development

SME Development Stages

PRE-SEED PHASE SEED PHASE START-UP PHASE EMERGING GROWTH DEVELOPMENT

HIGHER RISK LOWER RISK

Public Stocks

SME Initiative

InnovFin SME Guarantee

Cultural and Creative Guarantee Facility

Guarantees & Debt Programmes

Equity ProgrammesCOSME Equity Facility for Growth

InnovFin Tech Transfer

InnovFin SME Venture Capital

EaSI (Employment & Social Innovation)

EIB InnovFin products

COSME Loan Guarantee Facility

EU Financial Instruments 2014-2020

Infrastructure

Horizon 2020Equity and Risk Sharing Instruments

(€2.7 bn, including at least €1.5 bn for SMEs)

European Structural and Investment

Funds

EU level (central management)

National/regional instruments (shared management)

Off-the shelf FIs

Tailor made FIs

Significant higher amounts than

currently!

Competitiveness & SME (COSME)

Equity & guarantees(€1.4 bn)

Connecting Europe Facility (CEF)Risk sharing (e.g. project bonds) and equity

instruments

Employment and social innovation

(EaSI)(€192m)

Creative EuropeGuarantee Facility

(€121 m)

Erasmus+Guarantee Facility

(€517m)

Shared Management with MS - ESIF (Common

Provisions Regulation)

Centrally managed by EC(Financial Regulation)

Research, Development Innovation

Growth, Jobs and Social Cohesion

EFSI

SME Window

(SMEs and small mid-

caps)

Infra-structure

and Innovation

Window

COSME Financial Instruments

Support those SMEs which would otherwise not obtain financing(concept of additionality)

Loan Guarantee Facility (LGF): Focus on higher risk SMEs/riskiertransactions

Equity Facility for Growth (EFG): Focus investments into risk capitalfunds which target SMEs in their growth and expansion phase on a cross-border basis and/or help SMEs to internationalise

Overall target: Provide support to up to 330 000 SMEs; provide up to€25 billion in financing

Total budget of approximately €1.4 billion for both instruments,allocated on demand

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How do EU financial instruments work in practice - Overview

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COSME LGF:Signed agreements

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Austria AWS

Belgium SOWALFIN, PMV

BulgariaCIBANK

Czech Rep. CMZRB, Komercni Banka, Equa Bank

Denmark Vaekstfonden, Vaekstfonden Farmers

Estonia Kredex, Swedbank Bank, Swedbank Leasing

FranceFrance Active Garantie, SOCAMA, SIAGI, FranFinance,

GE Capital Equipement Finance,

Germany LfA, KfW*, Buergschaftsbanken

Hungary K&H, Avhga

ItalyBdM-MCC-Fondo di Garanzia, CdP-SACE, BCC Lease,

Credito Emiliano, Marche Piemonte Confidi Umbrella*

Montenegro CKB

Netherlands Qredits

Poland BGK, Raiffeisen Leasing, Idea Bank

Romania Libra Internet Bank

Slovenia SEF

Spain Microbank, CERSA

UK EZBOB, iwoca

Latvia Swedbank Bank, Swedbank Leasing

Lithuania Swedbank Bank, Swedbank Leasing

Slovakia CSOB

Greece NBG, Eurobank

21 Countries where agreements have been signed

4 Countries where transactions have been approved

1 Country where applications have been received

COSME LGF - Implementation

48 agreements signed at the end of July 2016, foran overall LGF budget allocation of almost EUR388 million

Financial intermediaries located in 21 countries(new country added since June Committeemeeting: Greece)

As of 30 June 2016, more than EUR 3 billion offinancing provided to more than 94,000 SMEs,thanks also to the support provided from the riskbearing capacity of the European Fund for StrategicInvestments (EFSI) since mid-2015

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Status of implementation - EFG

As of 30.06.2016, 8 agreements signed with

Set Fund II (Cleantech)http://www.setventures.com/

Panakés Fund I (Medtech)

http://www.panakes.it/

CapHorn 2 (ICT)

http://www.caphorninvest.fr/en

EMH Digital Growth Fund (ICT)

http://emh.com/

Diorama Investments (Generalist)

http://www.decainvestments.eu/

Standout Capital (ICT)

http://www.standoutcapital.com/23

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First EU-supported Greek Equity Fund

Diorama Investments

125 Meuros available for businesses

20 Meuros from EIF with EU backing

General Outlook

State of the Union speech of President Juncker:

European Fund for Strategic Investment - EFSI 2.0:

Confirmation of the use of the EFSI guarantee to top-up the COSME LGF

Proposed prolongation of EFSI until 31.12.2020 & increase of volume

• EU Guarantee: + € 10 billion (total: € 26 billion)

• EIB contribution: + € 2.5 billion (total: € 7.5 billion)

• Total increase of € 12.5 billion out of which 40% foreseen for the EFSI SMEwindow (5 billion)

Total market impact to increase from € 315 billion to at least € 500billion

Multi-annual Financial Framework (MFF) Review:

Proposed reinforcement of COSME programme: + € 200 million overyears 2017-2020, with at least 60% (€ 120m) to be allocated to thefinancial instruments

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Internationalization of SMEsThe Enterprise Europe network

EEN now in more than 63 countries – 625organisations

Objective: facilitate business cooperation -technology transfer - R&D partnership (increasedunder "Horizon 2020")

Rationale: increase cost-effectiveness; deliverservices at SMEs doorstep and open-up externalmarkets for SMEs

Principles: Internationalise through clusters &networks; complementarity & additionality;sustainability; efficiency

Geographical priorities: economic potential & sizeof market; difficult markets for SMEs; gaps inbusiness support

More information: http://een.ec.europa.eu/

Contact points in Greece:

• ATHENS

• - SINDESMOS EPICHIRISEON ET VIOMICHANION

• FOUNDATION FOR RESEARCH AND TECHNOLOGY HELLAS

• - ETHNIKO IDRYMA EREVNON

• - ATHENS CHAMBER OF SMALL AND MEDIUM INDUSTRIES

• - Materials Industrial Research and Technology Center SA

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Equity Investment Forum

- 2 days event

- 1350 participants during the conference

- 62 distinguished speakers

- 4 workshops

- 300 business proposals seeking finance

- 27 venture capital and private equity funds

- 510 meetings between entrepreneurs, investors and experts

Brokarage Events for Financing

Crowdfunding guide for SMEs

o Available in 23 languageshttp://ec.europa.eu/growth/access-to-finance/funding-policies/crowdfunding/index_en.htm

o In the course of 2016, the guide will be updated with new signposting links and advertised through appropriate channels

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Where to find information

• SBA and SBA Reviewhttp://ec.europa.eu/growth/smes/business-friendly-environment/small-business-

act/index_en.htm

• SME Performance Reviewhttp://ec.europa.eu/growth/smes/business-friendly-environment/performance-

review/index_en.htm

• COSME programmehttp://ec.europa.eu/growth/smes/cosme/

www.access2finance.eu