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New micro-finance facility to boost the European economy

Dimo Iliev, Policy Officer - ESF and Cohesion policy development, analysis and coordination

Europe experienced a sharp increase of the unemployment rate this last period, which required clear and operational measures to be taken by the EU. That\'s why the microfinance facility was created as a response to the crisis. The purpose of this new facility is to enable unemployed people to take a fresh start and to make entrepreneurship accessible to some of the most disadvantaged groups in Europe, including youth. Entrepreneurs and creators of microenterprises will benefit of: sponsorship, training, individualized support and increased resources in addition to the interest rate granted by the European Social Fund. The instrument was approved by the European Parliament on February 11, 2010. DG Employment, Social Affairs and Equal Opportunities, represented by Mr. Dimo Iliev, has agreed to answer our questions related to the new facility.

How does the micro-finance facility work? Who are the beneficiaries?



The Facility will increase the supply and accessibility of microloans for vulnerable groups and unemployed wanting to set up or further develop their own business. The facility is especially targeted at those who might not normally obtain credit to access to funds in the current context of reduced credit supply. The eligible beneficiaries defined in the legal base are:

a) persons who have difficulties entering or re-entering the labour market, as well as persons who are facing the threat of social exclusion or vulnerable persons who are in a disadvantaged position with regard to access to the conventional credit market and who want to start or further develop their own micro-enterprise, including self -employment;
b) micro-enterprises, especially in the social economy as well as microenterprises which employ persons referred to under point a.



May we have some details concerning the grants and the eligible beneficiaries? How can we obtain the micro-credits and which are the institutions in charge of them?



The precise products are still under discussion, but will most likely consist of guarantees, loans and equity.



Progress Microfinance Facility is supposed to be operational this year? Has a schedule been decided? Are there any important dates that we should be aware of?

The Facility will be operational from June 2010. People interested in applying for support from the microfinance facility should contact the providers of microloans in their home countries. These providers can be banks, not-for-profit micro lenders or institutions providing guarantees and other providers of microfinance products to microenterprises. Under the Facility, the European Investment Fund will make funding available for these providers to reach out to the audience targeted by the European Microfinance Facility.

The Commission will develop over the coming months a promotion campaign and will provide assistance to managing authorities in charge of the European Social Fund willing to interact with the Facility.



More information can be obtained from:
EMPL-MICROFINANCE@ec.europa.eu