COSME Financial Instruments for SMEs 20 March 2014 George Lemonidis (Deputy Head of Unit) Unit D3: SME Access to Finance Directorate General for Enterprise and Industry

COSME financial Instruments build on past experience Competitiveness and Innovation Framework Programme (CIP) COSME: Continued focus on SMEs only COSME: Continued focus on SMEs only Adjustments for new regulatory framework Revised Financial Regulation applicable to the EU budget (new section on Financial Instruments) New State Aid Rules Adjustments for new regulatory framework Revised Financial Regulation applicable to the EU budget (new section on Financial Instruments) New State Aid Rules 2

Principles to be met by EU financial instruments Annual report to European Parliament Ex-ante evaluation Art. 142 FR & 222 RAP Addressing market failures or sub-optimal investment situations Additionality Non-distortion of competition and consistency with State aid rules Alignment of interests No undue advantages (e.g. pari passu) Leverage effect No contingent liabilities for the EU budget 3

Details of the Loan Guarantee Facility Provides a frame financial intermediaries can create products suitable for their particular markets Capped portfolio guarantees free of charge Strict focus on additionality guarantees focus on transactions with a higher risk profile Wide range of interventions Working capital, investment loans, subordinated loans, bank guarantees, leasing Duration min. 12 months (transaction) – max. 10 years (guarantee) Amount ≤ € 150,000: for any type of SME > € 150,000: under conditions ≤ € 150,000: for any type of SME > € 150,000: under conditions 4

 The Commission remains committed to the support of SME loan securitisation via the COSME financial instruments  The COSME Securitisation Window will enable the securitisation of SME debt finance portfolios to mobilise additional debt financing for SMEs  Support for the transactions will be conditional upon an undertaking by the financial intermediary to use a significant part of the resulting liquidity or mobilised capital for new SME lending in a reasonable period of time The Securitisation window 5

Details of Equity Facility for Growth Growth & expansion stage Supports investments in risk capital funds which in turn invest predominantly into SMEs Eligibility criteria Minimum eligibility criteria will apply Business angels Funds co-operating with business angels are eligible as long as minimum criteria are met Investment period Long-term investments (5 to 15 year positions) Cross-border investments Funds must contribute to the creation of a pan-European VC market Horizon 2020 Possibility of joint investments with the early- stage equity facility of Horizon 2020 into multi-stage funds (pro-rata funding) 6

Member States Joint EC/ EIB SME initiativeEntrusted entity €€€ Application to call for expression of interest; demand driven Financing 7

Current status and next steps Summer 2013 European market test for the Loan Guarantee Facility Dec 2013/ Jan 2014 COSME legal base, 2014 Work Programme adopted Present Negotiation of terms & conditions / contracts with future entrusted entity Second quarter 2014 Launch of call for expression of interest for both facilities after signature of Delegation Agreement 8

EU Access to Finance Days  Information campaign: events in all Member States to present the different EU financial instruments  Target audience: potential financial intermediaries, Enterprise Europe Network and business representatives More information: ec.europa.eu/enterprise/policies/finance 9

access2eufinance.ec.europa.eu  Single access point to all EU financial instruments:  CIP, RSI, RSFF, Structural Funds, Progress, EIB/ EIF own resources  EU financial instruments mobilised over €100bn in  EU Finance Portal (currently)  Easy and simple access to all EU financial instruments  Over 1000 intermediaries in all EU28 and candidate countries  Available in 22 languages  EU Finance Portal (planned for )  Further improvements and continuous update  Joint effort of Commission services and EIB Group EU Finance Portal 10

Thank you for your attention! 11