EU facilitates access to small loans and mezzanine capital

On Friday the European Commission presented a package of measures aimed at supporting SMEs during their setting up and expansion phase by facilitating their access to loan capital. The Commission┬┤s objective is to triple annual early phase investments within the EU from currently two billion Euros to six billion Euros by 2013.

Thus the EU wants to make available more money for early phase investment, set up an internal market for venture capital and promote conventional bank financing of innovative projects, given that the financing of innovative SMEs is considered by many financial service providers to be risky due to high transaction costs and low return on investment. To this end the Commission wants to double the competitiveness and innovation budget (from 2007 until 2013) to approx. one billion Euros. In addition member states are supposed to remove obstacles to a pan European activity of venture capital funds and attract investors for seed-investments. Currently the Commission is also revising the rules on venture capital funds in favour of newly found companies. The objective is to discuss together with banks and SMEs how to improve long-term business relations, promote the granting of small loans and mezzanine capital. GERMAN