Brussels, 2 July 2009
€100 million EU micro-finance facility to help unemployed start small businesses
The European Commission has today proposed to set up a new microfinance facility providing microcredit to small businesses and to people who have lost their jobs and want to start their own small businesses. It will have an initial budget of €100 million, which could leverage more than €500 million in a joint initiative with international financial institutions, in particular the European Investment Bank (EIB) Group. The new facility is one of the actions announced in the Commission's communication: 'A Shared commitment for employment' on 3 June (see and ).
"The economic crisis will lead to 3.5 million job losses in the EU this year. The financial crisis has dried up credit to those wishing to start or develop their own businesses," said Employment and Social Affairs Commissioner Vladimír Špidla. "In the current recession, we want to offer a new start to the unemployed through easier access to credit to set up or develop new businesses. And we want to help small businesses to develop further despite the crisis. This will help create new jobs. The EU can provide real added value by maximising leverage in cooperation with the EIB Group, giving more people a chance to realise their dreams as entrepreneurs."
The current economic downturn started as a financial crisis prompted by severe liquidity problems: banks stopped lending to each other and also stopped lending to people to do business and create jobs. The new micro-finance facility aims to make it easier for people who, in the current context of reduced credit supply, might have difficulties in accessing funds for business start-ups.
Workers who have lost their jobs or are at risk of losing them and want to establish their own businesses will have better access to funds and benefit from additional support measures such as mentoring, training and coaching. Disadvantaged people, including the young, who want to start or further develop their own small businesses, will also benefit from guarantees and assistance in preparing a business plan.
An initial budget of €100 million is expected to leverage €500 million of credit in cooperation with international financial institutions such as the EIB Group. This could result in around 45,000 loans over a period of up to eight years. In addition, the possibility to apply to the loans interest rate rebates from the European Social Fund will make it easier for people to access the funds.
Micro-credit in the EU means loans under €25,000. It is tailored to micro-enterprises, employing fewer than 10 people (91% of all European businesses), and unemployed or inactive people who want to go into self-employment but do not have access to traditional banking services. 99% of start-ups in Europe are micro or small enterprises and one third of these are launched by people who are unemployed.
The Commission proposal will be discussed under the co-decision procedure by EU Member States at the Council of Ministers (QMV: qualified majority voting) and the European Parliament. The Commission expects the new 'Progress Microfinance Facility' to be operational in 2010.
As part of the EU's response to the crisis, the Spring European Council and the Employment Summit held in Prague in May identified and defined three key priorities: maintaining employment, creating jobs and promoting mobility. Building on this common effort, the Commission proposed 'A Shared Commitment for Employment' on 3 June to step up cooperation between the EU and the Member States as well between European social partners on these three priorities. Today's proposal is one of the initiatives outlined on 3 June.
Proposal for European Microfinance Facility and accompanying document
The European Commission's website on the social impact of the crisis
A Shared Commitment for Employment