COSME: new financing scheme for SMEs

July 24, 2014

Funding Scheme: 2014-07-24

Pgm2014 2020: Yes


Following an agreement signed between the EU Commission and the European Investment Fund on July 2 (EIF), up to € 25 bn will be made available in the form of loans garantees and equity to help SMEs gow and expand.


Thanks to the € 1,3 bn allocated in the COSME budget for SME financing, it will be possible to mobilise up to € 25 bn via leverage effects from financial intermediaries over the next seven years. The agreement paves the way for providing equity and debt financing for SMEs under the EU Competitiveness of Enterprises and SMEs (COSME) programme by the end of 2014. Following the signature of the agreement, the EIF will open a call for expression of interest to which eligible financial institutions (banks, guarantee institutions, funds etc.) can apply. After a thorough due diligence process, the EIF will select financial intermediaries which can then make the new finance available to European SMEs across all sectors.

€21 bn of guarantees for SMEs

COSME will operate by way of funding guarantees for banks in order to help them provide more loans and finance leases to SMEs. The impact is substantial as, due to the leverage effect of the COSME Programme, € 1 invested in a loan guarantee enables up to € 30 of financing to SMEs. These guarantees will typically help many SMEs who might otherwise not be able to obtain funding due to lack of sufficient collaterals.

It is expected that up to 330 000 SMEs will receive loans backed by COSME guarantees, with the total value of lending reaching up to € 21 bn. Based on the experience of the COSME predecessor programme, the Competitiveness and Innovation Programme (CIP), it is expected that 90% of the beneficiaries will have 10 or fewer employees with an average guaranteed loan of about €65 000. This is precisely the category of SMEs who currently face the most difficulties getting a loan.

€4 bn for equity to help SMEs to grow and expand

A part of the COSME budget will also be invested in funds that provide venture capital for the expansion stage of SMEs, in particular those operating across borders. The fund managers will operate on a commercial basis, to ensure that investments are focused on SMEs with the greatest growth potential. It is expected that some 500 firms will receive equity, with the overall investment volume reaching up to € 4 bn and attracting further finance by co-investments from other public and private sources.

Access to EU finance

The Access to finance portal provides easy, complete and up-to-date information on how entrepreneurs and SMEs can access over a total of € 100 bn of EU financing through various EU programmes during the next seven years. The portal provides detailed information on how SMEs can apply for finance supported by the EU, via one of approximately 1 000 banks and other financial institutions. The portal is accessible in all EU languages and for all EU and candidate countries.


COSME is the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (SMEs) running from 2014 to 2020 with a planned budget of €2.3bn with a leverage effect able to provide up to €25 bn. The programme will support SMEs in the following areas: better access to finance for SMEs, access to markets and promotion of the entrepreneurial culture. The COSME programme builds on the success of the Competitiveness and Innovation Framework Programme (CIP) which helped to mobilise more than € 16 bn of loans and € 2.8 bn of venture capital to over 328 000 SMEs in Europe from 2007-2013.

About the EIF

The European Investment Fund’s (EIF) central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over €7.9bn at end 2013. With investments in over 435 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over €5.6bn in over 300 operations at end 2013, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

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