It is important to highlight that the European Institutions are already actively committed to facilitate the growth of SMEs (Small and Medium Enterprises) defined as the backbone of the European economy. Already for the previous Programming Period (2007 – 2013) many SMEs satisfying the related requirements could access the finance instruments provided by the so known CIP (Competitiveness and Innovation Framework Programme). The CIP was first established on the 26th October 2006 by the Decision 1639/2006/EC of the European Parliament and of the Council having regard to the related proposals from the Commission and the European Economic and Social Committee and the Committee of the Regions.

The Competitiveness and Innovation Framework Programme (CIP) can therefore be defined as the instrument mainly aimed at supporting SMEs in their innovation activities (including eco-innovation) and at fostering their competitiveness by providing better access to finance and by delivering business support services in the Member States. CIP budget for the previous Programming Period (2007 – 2013) was EUR 3.621 billion. It initially comprised three component programmes each with a different budget allocated:

– The Entrepreneurship and Innovation Programme (EIP), with a budget of EUR 2.166 billion for the 2007-2013 period and main aim to provide better finance access to SMEs through specific financial instruments;

– The Information and Communication Technologies Policy Support Programme (ICT-PSP), with a budget of EUR 727 million for the 2007-2013 period and main aim to provide a better use of Information and Communication Technology (ICT) by citizens;

– The Intelligent Energy Europe Programme (IEE), with a budget of EUR 728 million for the 2007-2013 period known as the EU’s non-technological programme in the field of energy.


New Financing Opportunities Start Ups and for SMEs and Revised EU Funds Structure – COSME

In the actual economic environment, the finance access and therefore the growth of SMEs becomes always more relevant at all levels. The EU Institutions are therefore planning to continue the successful CIP experience to capitalize and boost the achieved results while slightly restructuring and further implementing the new Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) that will run from 2014 to 2020, subject to the approval by the Council and the European Parliament, with an estimated budget of € 2.5 billion.

Generally it can be said that COSME aims at encouraging the competitiveness of European enterprises. Furthermore it will further aim to facilitating access to finance for SMEs, creating an environment favourable to SME creation (start – ups) and growth, encouraging an entrepreneurial culture in Europe, strenghtening the sustainable competitiveness of EU enterprises.

The new Programme for the Competitiveness of Enterprises and Small and Medium Enterprises (COSME) will so be supporting the internationalisation of SMEs and improving their access to markets.

As part of the currently discussed new Programme, some of the previous initiatives undertaken by the above mentioned EIP (Entrepreneurship and Innovation Programme) component – those directly relating to research and innovation-related actions and instruments – are proposed to be transferred to Horizon 2020 (H2020). Under H2020 will also be undertaken those initiatives related to Information and Communication Technologies Policy Support Programme (ICT-PSP) and the Intelligent Energy Europe Programme (IEE).

But this also means that for the next Multiannual Financial Programming Period 2014-2020 parts of the Competitiveness and Innovation Framework Programme (CIP) will be transferred to COSME and in particular, the parts of the EIP dealing with competitiveness and entrepreneurship. As well as COSME will comprise the “Competitiveness Instruments”: financial instruments, Enterprise European Network, Intellectual Property Rights helpdesk, European Awards among others.

COSME will therefore aim to facilitate finance access so that accessing this programme will be simplified and entrepreneurs and SMEs will more easily benefit from it.

The new programme will also provide new financing opportunities for SMEs (Small and Medium Enterprises). The financial instruments foreseen under the COSME programme will target in fact SMEs in their growth and internationalisation phase: these instruments can be distinguished broadly between Equity Facilities and Debt Facilities. Under the first category are comprised the EFG (Equity Facility for Growth) instruments that will provide SMEs with venture capital in their expansion and growth phase; under the second category of Debt Facilities are instead comprised the LGF (Loan Guarantee Facility) instruments that will provide counter guarantees and direct guarantees for SME loans up to a threshold of Euro 150,000 during their expansion and growth stage. It is also correct to highlight that it has been proposed that the H2020 Facility will instead provide SMEs with venture capital in their start-up phase.

As far as Malta is concerned, a recent official report of the MBB (Malta Business Bureau) entitled ‘Market gaps in access to finance and the feasibility of new financing instruments in the EU addressing the credit needs of Maltese business’, has been recently presented to the competent Authorities underlying how so far SMEs are facing a limited range of financing options. The mentioned report in facts shows how 72% of SMEs in the start-up phase are currently using ‘traditional’ lending products such as loans and overdrafts when these are not necessarily the best solution for companies that are going through their stage of development. In line with the new EU Proposal to restructure the CIP and introduce the COSME, Malta agrees on the need of finding new generation and alternative finance access instruments in order to generate inclusive growth and create more job opportunities as well as high value self-employment support.



It seems therefore to be a common belief that different funding solutions need to be planned and implemented for enterprises which cannot invest massive assets as collateral, but that have a good business proposal and innovative ideas in order to win the global competitiveness in the digital era.

The EU acknowledges that throughout Europe, SMEs are increasingly requiring additional financing sources apart from lending. This need is now being addressed through the new 2014-2020 Multiannual Financial Framework Programming Period. Although as above mentioned, the EU is pushing towards promoting funding sources for SMEs in addition to lending, it would be desirable that these new proposed funding sources will include grant funding and innovative alternative financial instruments.

Large expectations would result satisfied for SMEs and entrepreneurs such as easier access to finance firstly, but also more prominent role for self-employment and business development as important sources of growth and job creation, and therefore a more competitive industry and higher employment rates.

As the existing entrepreneurs (small businesses in particular), also future entrepreneurs (including young people) would benefit from new generation finance access instruments for SMEs and start ups both for consolidation and growth of existing businesses as well as for initial assistance in setting up their own businesses in the start up phase.

As soon as the 1st January 2014 the EU proposal will be discussed by the European Parliament and the Council and if agreed COSME could be adopted and start then.

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