Boom in customized financing with European guarantee

18,800 € millions investment in SMEs and energy transition with financial instruments of the cohesion policy

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THERE IS smart life beyond the subsidies of the EU. Financial instruments were the least known option for SMEs and project managers to take advantage of cohesion policy. Until now. The Commission published on Wednesday, December 12 the data on the use of micro-loans, guarantees and other financial instruments ascribed to the Structural and Investment Funds. In 2017, 18,800 million euros were channeled through financial products with a European guarantee. It was 26.5% more than in 2016.

The commission welcomed the take-off in the use of these customized financing options, indicated for projects with economic viability that respond to priorities of the cohesion policy such as support for SMEs, energy transition, innovation, the circular economy, the digitalisation of society or sustainable mobility.

Financial instruments «have proven their effectiveness in maximizing the impact of every euro we invest in the field,» said Corina Cretu, the Commissioner for Regional Policy. The use of these products, he said, «is very promising for the success of the Cohesion Policy after 2020.»

56% of the Structural and Investment Funds channeled through financial instruments was assigned to projects presented by European SMEs. 16% was applied in energy efficiency projects and another 16% in innovation initiatives.

The outermost regions are not yet taking advantage of all the funding opportunities offered by these instruments. The European Investment Bank found this in an ad hoc study presented at the recent Conference of Presidents of the rup held in the Canary Islands on 23 and 24 November 2018. The underutilization is reflected in the data that the Commission has just published. Only Guadeloupe (8 million euros of Structural Funds allocated through Financial Instruments), Madeira (6 million euros) and Azores (24 million euros) have projects in the list of beneficiaries.

Of the three Member States with Rup regions, Spain has taken the best advantage of financial instruments. Its projects have received 2,578 million euros from the Structural and Investment Funds between 2015 and 2017, channeled through micro-loans, guarantees and other products. None of them is domiciled in the Canary Islands.

The financial instruments represent one of the various channels of use of the Structural and Investment Funds that make up the Cohesion Policy of the European Union. The essence of these instruments is the support for projects that present an economic viability and are aligned with the priorities of the cohesion policy. Micro-loans, guarantees and other mechanisms for guarantee against risk are similar to the products available in the banking market. In fact, many of the financial instruments are managed by retail banks, which act as intermediaries between the EU and the beneficiary. The Commission adds to the financing the technical support and subsidies for the interest and operating expenses of the operation, as part of the attractiveness of the European guarantee financial instruments. Its use has taken off in 2017, although not yet enough, in the outermost regions.

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