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European Union Activities in Favour of SMEs

European Union Activities in Favour of SMEs. Budapest, February 20, 2004 Dr. Timo Summa Director. Enterprise Directorate-General European Commission. Role of the European Commission. SMEs in Europe. 20 million SMEs in Europe  2/3 of total employment  average size : 6 persons

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European Union Activities in Favour of SMEs

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  1. European UnionActivities in Favour of SMEs Budapest, February 20, 2004 Dr. Timo Summa Director Enterprise Directorate-General European Commission

  2. Role of the European Commission SMEs in Europe • 20 million SMEs in Europe 2/3 of total employment average size : 6 persons • SMEs central to Political Objectives : • Lisbon goal • Charter for small businesses • Open method of co-ordination • « Think small first » and « SME Envoy »

  3. Role of the European Commission • Coordinate Member State actions • Enterprise Policy Scoreboard • Implementation of the Charter for Small Enterprises • BEST Projects • Elaborate an entrepreneurship policy: • Green Paper (January 2003) • Action Plan (February 2004) • Provide support to SMEs • financial instruments • through other EU policies

  4. COMPETITIVENESS • Competitiveness Report (annual), specific issues: • Manufacturing industry (2001) • ICT (2001) • Biotechnology (2001) • Services (2002) • Competition (2002) • Sustainable development (2002) Impact Assessment Benchmarking REGULATORY FRAMEWORK ENTREPRENEURSHIP & INNOVATION Less red tape • Charter on small enterprises • Action Plan on Regulatory Environment (2002) • Entrepreneurship Green Paper/Action Plan • Minimum standards for consultation • Communication on impact assessment • Scoreboards • Innovation (annual) • Enterprise Policy (annual) DG Enterprise main functions Enterprise Policy Main Activities

  5. DG Enterprise main functions Objectives of 2001-2005 Multi-Annual Programme for SMEs • Promote entrepreneurship • Enhance growth and competitiveness • Improve administrative and regulatory environment • Improve financial environment • Facilitate access to Community support services and networks

  6. Directorate B focus to support SMEs • Euro Info Centres network • Innovation Relay Centres • Financial instruments • Crafts • Women entrepreneurs • Ethnic minority entrepreneurs • Co-operatives, social economy • Database SMIE database : good practice database • SME Envoy

  7. Euro Info Centres Directorate B focus to support SMEs • > 300 EICs in 39 countries: European Union, Norway, Iceland, CEECs and the Mediterranean • Information, advice and assistance to SMEs • Provide feed-back to the Commission • Network effect

  8. Directorate B focus to support SMEs SME Envoy : mission OUTSIDE the Commission • Regular dialogue with SMEs and their representatives, both at national and European level • Inform SMEs and gather their feedback on EU legislation, programmes and policies • Active use of Euro Info Centres

  9. SME Envoy : mission (II) Directorate B focus to support SMEs INSIDE the Commission • « Watchdog function » to monitor policies affecting SMEs • Highlight SME concerns to relevant Commission services • Coordination role to increase awareness of SME specific interests

  10. European agenda for Entrepreneurship Policy areas mentioned by respondents A) Continued efforts needed Administration and regulation Access to finance Support and training services Innovation Facilitating transfer of businesses Entrepreneurship education Attitudes towards risk-taking and failure

  11. European agenda for Entrepreneurship Policy areas mentioned by respondents B)More efforts needed Social security for entrepreneurs Public procurement State aids Taxation Labour law complexity and inflexibility Internationalisation The regional dimension

  12. European agenda for Entrepreneurship The Entrepreneurship Action Plan Five key areas for action • Fuelling entrepreneurial mindsets • Encouraging more people to become entrepreneurs • Gearing entrepreneurs for growth and competitiveness • Improving the flow of finance • Creating a more SME-friendly regulatory and administrative framework

  13. The Entrepreneurship Action Plan Key actions 2004-2005 (1) 1. Fostering entrepreneurial mindsets among young people • Exchange of best practice • Commission Communication with key success factors / recommendations • Work jointly with DG EAC to promote Entrepreneurship Education 2. Reducing the stigma of failure • Prepare material for information campaigns • Verify progress on improving bankruptcy laws • Conference to disseminate findings of the recent project 3. Facilitating business transfers • Study on cost of company deaths • Foster development of business transfermarket places • Communication with further recommendations

  14. The Entrepreneurship Action Plan • Key actions 2004-2005 (2) 4. Reviewing social security schemes for entrepreneurs • Identify influence of social sec. schemes on entrepreneurship drive • Good practices brochure • Investigate appropriateness of possible regulatory measure 5. Providing tailor-made support for women and ethnic minorities • Study on support for young entrepreneurs • Set up network on good practice exchange on access to finance • European conference on support services for these groups 6. Supporting businesses in developing inter-enterprise relations • Support partnering events bringing together various stakeholders • Develop administrative support/IT tools to assist BICs, EICs & IRCs • Extend innovative regions program

  15. The Entrepreneurship Action Plan Key actions 2004-2005 (3) 7. Creating more equity and stronger balance sheets in firms • Evaluate current financial instruments • Publish info on business angels market • Investigate tax disincentives to stronger balance sheets • Review/simplify state aid rules to SMES 8. Listening to SMEs • Best project report with state of play/good practices/reference model • Establish early-warning system for SME policy matters • Improve the IPM exploitation mechanism 9. Reducing the complexity of complying with tax laws • Launch a pilot scheme to apply ‘Home State Taxation’ • Set up one stop shop mechanism for VAT registration across MS

  16. The Entrepreneurship Action Plan Possible key actions 2006 and beyond • Conducting entrepreneurship campaigns • Fostering the creation of more fast-growing enterprises (gazelles) • Promoting entrepreneurship in social sectors • Enabling micro-enterprises to recruit by reducing the complexity of regulations • Facilitating SMEs’ access to public markets

  17. Periodic reports on Member States and Commission actions in favour of small businesses (focusing on priority actions) Priorities 2003 listening to and consulting small businesses innovation and technology transfer access to finance (particularly venture capital and micro loans) Priorities 2004 to be fixed by February 2004 The Charter for Small Enterprises Equipping small businesses to take full advantage of the knowledge-based economy

  18. The Best Project Cycle Identification Definition Execution Best Monitoring Adoption

  19. Examples of BEST Projects • Training for Entrepreneurship • Benchmarking the administration of start-ups & the management of incubators • Business Angels network • Top-class business support services • Transfer of business • Entrepreneurship amongst women • Skill shortage in ICTs • Restructuring, Bankruptcy and Fresh start

  20. Financial instruments: MAP • Financial instruments 2001-2005 • Total funding € 317m • Managed by the EIF • Using national financial intermediaries • Three windows • ETF Start-up: venture capital investments • SME guarantee facilities • Seed Capital Action: support for seed funds

  21. Financial instruments: ETF Start-up • Investments in VC funds and incubators • Currently Member States and EFTA • Seed funds, small funds, regional funds, focused funds. • Target SMEs less than 5 yrs old • Funds should be commercially oriented • Private funding should be at least 50 % • EIF investment normally 10 to 25 % • At most € 10 m • Usually for 5 to 12 years

  22. Financial instruments:SME Guarantee Facility 1 • Equity guarantees • Using financial intermediaries • Existing equity guarantee portfolios • EIF cover limited to €0.5m per SME • EIF risk additional to the normal risk of the institution • EIF cover rate negotiated individually (max. 50%), with a total loss cap • Guarantees up to 10 years

  23. Financial instruments:SME Guarantee Facility 2 • ICT loan guarantees • Financial intermediaries • Information technology and training investments of SMEs which have up to 100 employees • Medium-term loans (longer than 18 mths) • Risk sharing EIF / intermediary • EIF guarantee rate up to 75 % of the intermediary’s commitment, capped • Guarantees for up to 10 years

  24. Financial instruments:SME Guarantee Facility 3 • Loan guarantees • Through financial intermediaries • For SMEs with growth potential, with up to 100 employees • For investments, including intangibles • Medium / long-term loans (over 18 mths) • EIF guarantee rate up to 50 % of the intermediary’s commitment, with cap

  25. Financial instruments:SME Guarantee Facility 4 • Microloan guarantees • Financial intermediaries • For SMEs up to 10 employees • Particularly for start-ups • Loans up to € 25 000 • Also overhead support for intermediaries up to € 200 per loan guaranteed. • EIF guarantee rate up to 75 % of the intermediary’s commitment • Guarantees up to 5 years

  26. Financial instruments:Seed Capital Action • Support for seed funds and incubators • For those in which EIF participates • Grants to cover part of management costs • € 100 000 per new staff member, at most € 300 000 or 5% of capital allocated for seed investments

  27. Financial instruments: other actions • Developing risk capital markets • Risk Capital Action plan • Best practices on business angels • Banks and SMEs • Round tables supporting dialogue • Framework conditions • Eg. effects of Basel II • European Investment Bank (through intermediaries) • “Global Loans” • Venture Capital

  28. Other EU programmes and policies on SMEs • Information Society programs: e-EUROPE, GO-DIGITAL • 6th framework Programme for Research & Development 2002-2006 • Education and training: LEONARDO • Environment: LIFE III • Intelligent Energy programme • External relations and international cooperation: AL INVEST, ASIA INVEST, GATEWAY TO JAPAN

  29. Other EU programmes and policies on SMEs Better regulation Action Plan for simplifying and improving regulatory environment Reduce the volume of legislation • Integrated method of impact assessment • Better transposition and application of EU legislation in Member States • Principles and Minimum standards for consultation • Commission internal legislative network

  30. Structural Funds Other EU programmes and policies on SMEs • ERDF, EAGGF Structural funds (nationally managed), Cohesion Fund • ESF : entrepreuneurial skills, technology transfers • INTERREG - URBAN – LEADER -EQUAL • Venture capital, guarantees • € 213 billion for 2000/2006 • Regional innovation measures

  31. Other EU programmes and policies on SMEs Structural Funds (II) • 350 programmes, 100 000 projects every year • Programme management and project selection at national level • Regulation on eligible expenditures http://europa.eu.int/comm/regional_policy/sources/docoffic/official/regulation/reglem_dep_en.htm • List of managing authorities http://europa.eu.int/comm/regional_policy/manage/authority/authority_en.cfm

  32. Other EU programmes and policies on SMEs Research and Development • SME Programme • Explanatory awards • Cooperative research • Innovation • Cordis (www.cordis.lu) • Gate2Growth (www.gate2growth.com) National Contact Points Eur. Commission info Desks

  33. Other EU programmes and policies on SMEs Innovation and Technology Transfer • Innovation policy • Gate2Growth : business plan assistance & project-investor matching (www.Gate2Growth.com) • Networks • Innovation Relay Centers : 68 IRCs to promote technology transfer • ‘Innovating Regions in Europe’ network • CORDIS (www.cordis.lu)

  34. Contacts • Web site: http://europa.eu.int/comm/enterprise • Euro Info Centres: http://europa.eu.int/comm/enterprise/networks/eic/eic.html • Support measures database: http://europa.eu.int/comm/enterprise/smie/index.htm • SME Envoy: entr-sme-envoy@cec.eu.int Fax : +32.2.299.41.43

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