“COSME: New EU program comes into force for SME financing

On January 1, 2014, the new EU program “COSME” was launched. It runs until 2020 and is designed to promote small and medium-sized enterprises (SMEs) in particular. The program is funded by the Competitiveness and Innovation Framework Program (CIP) and has a total budget of €2.5 billion.

COSME is intended to significantly increase the competitiveness of SMEs in particular. SMEs are to be given easier access to funding and to markets inside and outside the EU with the help of the EU program.

COSME addressees

COSME is primarily aimed at SMEs. This includes – irrespective of the area of activity and any industry affiliation – all companies with fewer than 250 employees that are also independent and whose annual sales do not exceed €50 million or an annual balance sheet total of €43 million. COSME can also be used by regional and municipal authorities and, to some extent, by non-SMEs. The details can be found in the work program, which is available on the EU Commission’s website.

COSME continues a large part of the Entrepreneurship and Innovation Program (EIP) actions that are under the umbrella of the current Competitiveness and Innovation Framework Program (CIP). The previous EIP measure areas “Innovation” and “Eco-innovation” will be integrated into the new, more technology-oriented “Horizon 2020” program. With programs complement each other.

Central goals of COSME are:

• facilitating access to finance for SMEs
• the creation of a favorable environment for the establishment and expansion of new businesses
• the promotion of an entrepreneurial culture in Europe
• increasing the sustainable competitiveness of European companies
• supporting SMEs in expanding abroad and improving their access to markets

To further these goals, the COSME program provides for two forms of facilities in particular:

• A credit facility allows SMEs to obtain direct guarantees or other risk-sharing arrangements with financial intermediaries to cover loans up to 150. 000 €.
• An equity facility targets growth-stage investments, providing SMEs with repayable equity capital focused on commercial objectives, mostly in the form of venture capital, with the help of financial intermediaries.

The individual financing instruments are provided by the national commercial banks in the individual EU member states. Disbursement of the subsidies is made through the commercial bank after the application has been approved.