EU lender seeks out would-be borrowers

By Stewart Fleming

Date: 08/06/06

A gap analysis being carried out by the European Investment Fund (EIF) to assess the balance of supply and demand in Europe's regions for finance aimed at small- and medium-sized businesses is expected to reveal substantial 'hidden' demand for loans.

The EIF analysis is part of the first phase of the Commission's JEREMIE (Joint European Resources for Micro to Medium Enterprises) initiative, aimed at improving access to finance for SMEs. The results will be published next year. The JEREMIE initiative, first presented by Commissioner Danuta Hübner last October, is an important element of the EU cohesion policy for 2007-13.

The Paris-based Association pour le droit à l'initiative économique (Adie) estimates that there is currently potential demand for 11 million individual loans.

Maria Nowak, the president of Adie, described the 11 million potential as a "conservative estimate". It would stem from four million small businesses and seven million unregistered, or black market, activities. "It is a demand which will not be fulfilled overnight," she said.

The EIF, which is part of the European Investment Bank, does not give loans to SMEs but does make funds available to financial intermediaries. EIF executive Fabrizio Corradini said: "Not all [needs] can be addressed by increasing the supply of capital. In some cases, it is a question of making existing local supply more comprehensible, accessible and better tailored to its SME users."

Novak added: "The JEREMIE initiative is important - it moves off the beaten track of bank financing."

Article takes a look at the European Union's policy towards improving access to finance for small and medium-sized enterprises.