Financing Sustainable Communities and Entrepreneurship in Europe

1. Conclusions • Workshop 2 • Sustainable communities, entrepreneurship and micro-credit

2. Entrepreneurship and micro-credit

3. GERMANY: addressing start-ups • A demonstration that the challenge of access to finance is widespread • Typical German SME is highly dependent on external finance • Globalisation has undermined traditional sources of capital for SMEs: new sources of finance needed • Particular challenges of start-ups: • 86% of start-ups SMEs need only about 25,000 euros • Lending to start-ups just not profitable for banks • New financial instruments for SMEs cannot be implemented overnight: requires long-term commitment • Need for differentiated approach adjusted for risk

4. UK: regional level is important • Finance South West (UK): starting up a financial intermediary from scratch. Success factors: • Local or regional base: cannot be managed nationally • Overhead control while maintaining staff quality • Simplicity in products offered • After sales service (hands-on finance) • Need for ERDF – permits risk-taking • EIF guarantees important

5. SPAIN: targeting sectors • The role that local authorities can play, in this case with the support of the ERDF and EIF, in promoting risk capital and more recently, innovation • Development of targeted products - financial engineering schemes tailored towards specific groups or objectives: • female or youth entrepreneurship • CAMPUS - promoting technology transfer from universities to business

6. FRANCE: Not just finance, need for accompaniment • ADIE (Association pour le droit à l’initiative economique) experience suggests: • Major need for micro-finance • Microfinance an effective instrument: % of loans on which borrowers have defaulted = 3.8% • Need for accompaniment

7. FRANCE: Not just finance, need for accompaniment • Advice for JEREMIE: • Need for sustainability over the longer-term • One fund for the whole national territory (regional focus? competition rules?) • Micro-credit providers should have long-term plan • Evaluation • ADIE willing to help in the evaluation of gaps in the market under JEREMIE planned for 2006-7

8. Sustainable communities

9. UK – Investing for Sustainable Communities • The challenges of the cities: • Long-term population decline • Planning strategies unfavourable to urban development • Promoting the new economy in the post-industrial society • The objective: sustainable communities – 8 characteristics • The UK approach to developing sustainable communities: • Public-private partnerships • Exchanges of experience (begun under NL and LUX presidencies – Bristol informal ministerial December 2005) • Make cities and regions more “investable” and “investment-ready” • Result: 50 billion euros in investment since 1997

10. Commission-EIB-CEB joint initiative The European Commission and the Banks aim at developing an integrated approach combining ERDF grants with EIB and CEB loans Urban development will continue to be funded by grants from the ERDF Urban renewal and social housing would be financed by loans from the EIB and the CEB Access to finance for SMEs and micro-credit part of an integrated approach: JEREMIE can also help the cities

11. Commission-EIB-CEB joint initiative (cont.) Key moments for cooperation: • the National Strategic Reference Frameworks (NSRF) • the new operational programmes, 2007-2013