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St r uctural instruments in Romania Conference, December 11 / 12 - 2006

St r uctural instruments in Romania Conference, December 11 / 12 - 2006 Presentation by Stefan Adamec A CCESS TO FINANCES The finance needed to support growth. Introduction Part A: STANDARD APPROACH OF THE COMMERCIAL FINANCIAL INSTITUTIONS TO THE EU COOFINANCING Part B:

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St r uctural instruments in Romania Conference, December 11 / 12 - 2006

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  1. Structural instruments in Romania Conference, December 11 / 12 - 2006 Presentation by Stefan Adamec ACCESS TO FINANCES The finance needed to support growth

  2. Introduction Part A: STANDARD APPROACH OF THE COMMERCIAL FINANCIAL INSTITUTIONS TO THE EU COOFINANCING Part B: ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE

  3. Introduction The Structural and Cohesion Funds for Romania amount to 19.668 billion Euros, out of which 12.661 billion Euro will be canalized through the Structural Funds under the Convergence Objective, 6.552 billion Euro for the Cohesion Fund, and 0.445 billion Euro will be allocated for the European Territorial Cooperation.

  4. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING Drawing of EU funds: • Drawing of EU funds based on the percentage ofirrecoverable subsidy; the so-called assistance intensity is based on determination of the justified expenses’ amount. • The project costs are usually higher than the amount of justified expenses, based on which the EU subsidy amount is calculated

  5. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING BASIC RULE: Reimbursement from EU funds can be made only after the expenses have been paid using own/bank funds.

  6. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING Banks with the specialized products usually offer the following services: • assistance with preparation and presentation • financing of the project • helping to obtain irrecoverable EU funds and meet your target. Drawing of EU funds is always connected with the applicant’s own funds. In case you lack sufficient amount of own funds, the bank offers you a loan to bridge the time period until the reimbursement from EU funds or the possibility of co-financing:

  7. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING Advance financing: • Bridge loan with EU funds (up to the amount of approved grant) – to bridge the time gap between the need of payment of justified costs to the client’s supplier and reimbursement of these expenses by payment unit Co-financing: • Investment loan (up to the amount of approved grant)Working capital loan

  8. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING Other products make the project successful: • Monitoring of EU funds issues • Consultancy - prior to and during the project preparation • Commitment letter- binding – declares the bank’s readiness to finance the project- non-binding - binding confirmation that, providing that the client’s project has been approved by the managing authority, the bank will finance the project • Bank guarantees – prior to and during the project preparation • Special banking account - keeping of a special banking account for all financial flows related to the project that is financed from Structural Funds

  9. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING Project cycle with the bank: • Success of the project depends especially on quality preparation and right timing of the application filing upon the respective call. • There is no need to wait until the specific call for proposals’ submission has been published, you can come and consult on your project beforehand. • The bank will become your guide over the entire project preparation, financial support inclusive.

  10. STANDARD APPROACH OF THE COMMERCIAL FINANCIALINSTITUTIONS TO THE EU COOFINANCING The banks offer professional and financial assistance in the following areas: • Obtaining information • EU financing criteria • Project priorities • Project preparation • Time schedule • Cooperation with managing authorities in course of the project’s monitoring period. THE END OF PART A

  11. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE JEREMIE “Joint European Resources for Micro to Medium Enterprises” Enhancing access to finance in the European Regions

  12. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE The initiative JEREMIE will enable European Member States and Regions to use part of their structural funds to obtain a set of financial instruments that are specifically designed to support micro and small and medium enterprises.

  13. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE JEREMIE features non-grant instruments such as loans, equity, venture capital and guarantees. The added value of undertaking these actions is managed in cooperation with the EIB Group, namely European Investment Bank (EIB) and European Investment Fund (EIF). 

  14. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE • OBJECTIVES- access to finance, to obtain a set of financial products specifically engineered for Micro, Small and Medium Enterprises. • FINANCIAL INSTRUMENTS - Advisory and technical assistance- Equity and venture capital- Guarantees (both for microcredit loans and SME loans)

  15. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE • FUNDING it will be possible to transform part of the grants into financial products • EIF COOPERATION EIF may manage JEREMIE during the financial perspective 2007 to 2013 on behalf of the programme authorities. Funds will be channelled by EIF to local financial institutions that will in turn provide financing to SMEs.

  16. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE • IDENTIFICATION OF THE REGIONAL PROGRAMMES - Operational programmes will define the objectives and resources for SME access to finance initiatives, based on analysis about disparities in the regions - The fund-holder (e.g. EIF) will select financial  intermediaries that will channel JEREMIE funding at local level - Potential financial  intermediaries include regional venture capital funds, banks, guarantee schemes,  micro-credit providers, technology transfer organisations, etc.. - A funding agreement will be signed in each case with the programming authority.

  17. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE • ELIGIBILITY CRITERIA - Eligible enterprises are SMEs with a maximum of 249 employees, a maximum annual turnover of EUR 50 million and/or a maximum annual balance sheet of EUR 43 million. - Preference should be given to small (< 50 persons; balance sheet/annual turnover  < EUR 10 million) and micro enterprises (< 10 persons; balance sheet/annual  turnover < EUR 2 million).

  18. ADDITIONAL FINANCIAL RESOURCES OF THE EU INNOVATIVE INSTRUMENTS – JEREMIE CASE • SCHEDULE 2006 – Preparatory phaseMember States and the European Commission, with support from EIF, will identify the financial engineering needs in their respective regions for the financial period 2007 - 2013. This evaluation will form part of an action plan. 2007 – Implementation phaseOn 1st January 2007, the JEREMIE initiative will enter into the implementation phase and will become operational.

  19. Thank you!

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