SME support in EU regions

Briefing 01-10-2015

The European Union supports businesses and entrepreneurship through a wide range of programmes. Specific focus is afforded to small and medium sized enterprises (SMEs), as they form the largest share of EU businesses and provide the majority of jobs and turnover. SMEs are also important for EU regional competitiveness, as they often operate on a local scale and play a crucial role in strong regional economies. In addition to financial assistance, the EU offers various types of business support, such as information, advice and training. The EU also supports SMEs through regulatory changes, such as eliminating obstacles in cross-border trade and streamlining administrative procedures. Providing access to finance is, however, a major EU SME policy priority, as small enterprises encounter the greatest difficulties to procure funding. European SMEs rely predominantly on bank loans, therefore the EU not only provides direct grants, but also tries to increase the credit available to SMEs. Additional steps are taken to develop innovative financing instruments, such as risk-sharing schemes and guarantees, in order to mobilise venture and equity investors, and to encourage expanded use of capital markets for financing SMEs. SMEs applying for EU funding can do so via several sources. Grants from the European Structural and Investment Funds, which finance cohesion policy, are accessed through calls for application published by national and regional authorities who manage the funds. Various financial instruments (such as loans and microcredits), provided by the European Investment Bank and European Investment Fund, are available through local financial intermediaries, who offer loans to SMEs on preferential terms. Lastly, SMEs can apply directly for funding by programmes managed by the European Commission, such as Horizon 2020, COSME (Competitiveness of Enterprises and Small and Medium-sized Enterprises) and others, in areas including environment, transport, research and innovation.