Member states urged to support plan to boost small business funding

Date: 15/01/1998

By Simon Coss

IN A bid to help finance Europe's small firms, the European Commission will next week call on Union governments to reallocate 450 million ecu of EU funds.

The plan was drawn up by the European Parliament and agreed in principle at last November's EU jobs summit. For it to come into force, however, the Commission must present a formal legislative proposal to the Council of Ministers.

Economics Commissioner Yves-Thibault de Silguy is due to put forward the plan, along with Commission President Jacques Santer, Christos Papoutsis (small businesses) and Erkki Liikanen (budget) at next Wednesday's (21 January) meeting of the full Commission.

The proposal is part of a three-pronged strategy to help Europe's small and medium-sized enterprises (SMEs) gain access to start-up and venture capital.

Further money for the sector will be made available through loans from the European Investment Bank and the European Investment Fund.

The 450 million ecu will be found by repackaging existing budget lines and will be made available over the next three years.

Of the 150 million ecu earmarked for 1998, 120 million will be spent on providing risk capital, loan guarantees and funding joint ventures across the Union. The remaining 30 million ecu will finance pilot projects focusing on social policy.

German Christian Democrat MEP Stanislaw Tillich, the Parliament's rapporteur on the 1998 EU budget, said he was broadly satisfied with the Commission proposal.

But he added that some points still needed to be ironed out, including how SMEs should be defined for the purposes of the scheme. The Commission usually identifies SMEs as those employing less than 250 people with an annual turnover of under 40 million ecu. But MEPs want the new strategy to focus on firms with less than 100 staff.

"Our wish was to concentrate money for the start-up of very small enterprises," explained Tillich, adding that the scheme should be useful for school leavers who lacked the collateral to secure bank loans to start their own businesses.