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EU Funding

There are two main sources of EU funding:  funding for investment through the European Investment Bank Group and funding for innovation through the European Commission.

Funding for Investment

The European Investment Bank Group is made up of the European Investment Bank (EIB) and the European Investment Fund (EIF).

The EIB is owned by the 27 Member States of the European Union.  Each Member State’s share in the EIB’s capital is based on its economic weight within the European Union (expressed in GDP) at the time of its accession.  However, no geographical or sectoral quotas are applied to the EIB’s financing operations.

The EIB is the majority (61%) shareholder in the EIF, with the European Commission holding a 30% stake and various public and private financial institutions holding the remainder.

EIB Intermediated Loans

Small businesses in Ireland access EIB funding mainly through intermediated loans offered by banks.
The EIB provided more than €1,000 million in intermediated loans through partner banks in Ireland (AIB, Bank of Ireland, Bank of Scotland (Ireland) and Ulster Bank) since the start of 2000, with contracts worth €260 million signed in 2009 alone.

What is it?
An intermediated loan is a type of loan, which is provided indirectly by the EIB through banks, that enables small businesses to finance projects with a total investment cost of less than €25 million.

The EIB does not fund the business directly nor does it make the decision on whether a business should get a loan.  The funding is provided indirectly through partnered commercial banks and financial institutions.  These lenders decide whether or not to provide the loan to a business and set the conditions of financing (interest rate, loan period, etc.) although the loan periods will typically range between five and 12 years.  To be eligible for the type of loan a business be an SME (that is, it should normally have fewer than 250 employees) and the funds must be used to support new productive investments.

The benefit of EIB loans is that it can be cheaper for lenders to borrow funds to lend to small businesses loans from the EIB than from another source.  Participating banks pass on this cost advantage (a given amount in basis points) to eligible SMEs, as agreed with the EIB, which means that small businesses directly benefit from the lender’s lower costs of borrowing.  This financial advantage is clearly communicated to the final beneficiary in the loan documentation.

How do I apply?
Small businesses interested in applying for an EIB loan should contact one of the EIB’s intermediary banks.  The EIB maintains a list of current intermediaries and their contact details here.

The EIF provides two types of funding supports for small businesses:  equity investment through venture and growth capital or credit products (primarily guarantees).  Like the EIB, the EIF does not provide finance directly to small businesses but works through intermediaries.

European Investment Fund Venture Capital Facilities

The EIF acts as a fund of funds supporting venture capital and private equity funds that invest in small businesses, particularly high-growth and innovative companies that are in their early stages of development.  Most of the EIF-supported funds investing in Ireland concentrate on companies involved in information and communications technology (ICT) or life sciences.  The EIF equity portfolio in Irish small businesses was €98 million by the end of 2010.

How do I apply?
The EIF does not provide funding directly so entrepreneurs looking for investors with EIF backing should contact one of the funds supported by the EIF.  These funds decide make investment decisions based on their own commercial criteria.  A full list of all venture capital and private equity funds that have been backed by the EIF is available on the EIF website here.
What is venture capital?
Venture capital is medium to long-term finance provided by professional investment companies in return for an equity stake.  The companies typically invest in businesses, which are not listed on a stock exchange, with high growth potential at the early (seed or start-up) or growth stage of development.

For more information on venture capital in Ireland, visit the website of the Irish Venture Capital Association here.

Competitiveness and Innovation Framework Programme (CIP) – EU Guarantees

The EIF also provides credit insurance/guarantees and credit enhancements to institutions providing small business loans.  These guarantees are known as EU Guarantees and are provided under the SME Guarantee Facility, which is funded by the European Union under the Competitiveness and Innovation Framework Programme (CIP 2007-2013).  The overall objective of CIP is to improve access to finance for start-up and growth of small businesses and promote investments in innovation, including eco-innovation.

The SME Guarantee Facility benefits small businesses because it reduces the lender’s risk and incentivises them to lend to businesses that might not normally be approved for credit.  The EIF’s credit insurance facility allows the Fund to take up to 50% of the credit risk on every individual loan.

The EIF’s guarantee portfolio in Ireland totalled €3 million by the end of 2010.

How do I apply?
To apply for a loan, a business must be an eligible SME as defined for CIP by the European Commission.  The enterprise must have:

  • fewer than 250 employees
  • turnover of less than €50m and/or a balance sheet total of less than €43m
  • the business is considered an SME as set out in the EC’s regulations. For information about the EU’s SME definition, click here.

The EIF maintains a list of CIP loan finance providers in Ireland and publishes it on its website here.

EU Funding for Innovation

There are a number of EU programmes which provide funding to small businesses that support research and innovation. The four main programmes are:

  • The Seventh Framework Programme (FP7) – FP7 provides funding for research aimed at strengthening the scientific and technological base of industries in Europe.
  • The Competitiveness and Innovation Framework Programme (CIP) – This programme supports innovation activities and provides better access to finance.
  • EUREKA’s Eurostars Programme – This programme provides funding for small businesses that undertake research and development programmes.
  • European Cooperation in Science and Technology (COST) – This programme does not provide funding but allows for collaboration between European countries on nationally-funded research.

The Seventh Framework Programme (FP7)

Who can apply?
Companies that want to engage in research and innovation that fall under the following categories:

  • Internationally traded services companies
  • High potential start up companies
  • An individual or group who want to develop a business plan

For more information on eligibility, please see the European Commission’s CORDIS website here.

Areas of Interest
The Programme is divided into four themes:

  1. Cooperation: Collaborative Research
  2. Ideas: Frontier Research
  3. People: Marie Curie Actions
  4. Capacities: Research and Innovation Capacities

The most important area for Irish business is the Marie Curie Industry-Academia Partnerships and Pathways. This programme assists companies to work with universities by paying for the placement and training of qualified researchers. The funding is awarded through a competitive process based on international peer review.

For more information regarding the submission of proposals, visit the FP7 PeopleNetwork website here.

The Competitiveness and Innovation Framework Programme

Who can apply?
Any small business with less than 250 employees and a turnover of less than €50 million can apply under this programme.

What does the programme provide?
This programme works by providing loan guarantees to encourage banks to make more debt finance available to small businesses. For more information on how to avail of CIP, please see the EC’s access2finance website here.

EUREKA’s Eurostars Programme

Who can apply?
Any R&D small Irish business planning on undertaking a research project can apply. This means that the business must dedicate at least 10% of their turnover or full time equivalent to research activities. There is specific criteria in relation to the project which can be found here.

How does the programme work?
To avail of funding under this programme, the project must involve at least one other partner from another Eurostars member country and last no more than three years. The product of the research must be completed within two years and the product must be ready to go to market at that time.

European Cooperation in Science and Technology (COST)

COST makes it possible for national facilities, institutes, universities and private companies to work together on research and development activities. It acts as a bridge between different European countries in the areas of science and technology. The research undertaken is funded nationally but COST provide financial assistance for joint activities such as conferences, short term scientific exchanges and publications.

For more information about COST, please see the COST website here.