Commission adopts new rules on risk finance
The European Commission has adopted new guidelines setting out the conditions under which member states can grant aid to facilitate access to finance by European SMEs and companies with a medium capitalisation (so-called ‘midcaps’).
The new guidelines are part of the Commission’s State Aid Modernisation (SAM) strategy, which aims at fostering growth in the single market by encouraging more effective aid measures and focusing the Commission’s scrutiny on cases with the biggest impact on competition.
European Commissioner for Competition Policy, Joaquín Almunia (pictured), said: “The market failure in access to finance, which has been exacerbated by the crisis, affects European companies in their development, from the start-up stage onwards. These new rules will help bridge this funding gap by encouraging member states to put in place well-designed aid measures. Such measures can give private investors the right incentives to invest more into SMEs and midcaps, enhancing their capacity to grow and create jobs.”
Certain SMEs and midcaps, particularly innovative and growth-orientated SMEs in their early development stages, have difficulties obtaining funding. State aid can help address this funding gap by attracting new money into new ventures through well-designed financial instruments and fiscal measures.
SMEs are still heavily dependent on traditional bank lending, which is limited by the banks’ refinancing capacity, risk appetite and capital adequacy. The financial crisis has amplified the problem: approximately one third of SMEs have been unable to get the finance required in recent years, hence creating a “funding gap”. Consequently, the Commission is setting up a state aid framework for the provision of risk finance to SMEs and midcaps.
Almunia added: “This initiative complements the other initiatives launched at EU level which contribute to facilitating access to finance, such as Horizon 2020 and COSME.”
The new guidelines replace the ‘risk capital guidelines’ adopted in 2006 and amended in December 2010; they will enter into force on 1 July 2014.
