December 4 2021: The Commission has published the Annual Summary Report on the implementation of financial instruments in 2020. The report shows that financial instruments have supported European small and medium sized companies (SMEs) and other recipients for a total of €29 billion in 2020. Out of these, €21.6 billion (of which €7 billion for working capital) under the European Structural and Investment Funds (ESIF) have underpinned 478,000 SMEs, including 375,000 microenterprises.
Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “Financial instruments can deliver cohesion policy investments in a flexible and cost-efficient way and attract additional investments. During the coronavirus crisis, they helped to swiftly support small businesses to survive and to keep their employees. For the 2021-2027 period I am encouraging Member States and regions to make an increased use of financial instruments and their benefits.”
Financial instruments as a crucial means to help mitigate the economic effects of the crisis
Financial instruments such as equity and debt, loan guarantees, venture capital and risk sharing facilities have proved to be a resource-efficient way of using Cohesion policy resources, even more in times of crisis. The coronavirus pandemic hit SMEs particularly hard, and many workers were at risk of losing their jobs where businesses were struggling to survive. Financial instruments have been crucial to deploy support to the SMEs most in need and thus helped to mitigate the negative economic effects of the coronavirus crisis on regions and cities in the EU. In particular, financial instruments under the European Regional Development Fund provided help in the form of financial products like loans, guarantees and equity. Compared to 2019, 365,000 additional SMEs received support via financial instruments, meaning about 1000 more SMEs per day, for a total of 478,000 SMEs in 2020.
Additional flexibility thanks to the EU
Financial instruments have proved to be an asset, especially thanks to the additional flexibility provided by the Coronavirus Response Investment Initiative (CRII) and Coronavirus Response Investment Initiative Plus (CRII+), where Member States could address resources to the changing needs of the recipients. Another key characteristic of financial instruments is their leverage effect as they can attract additional investments from private or public investors. Finally, they are a cost-efficient delivery mechanism with very low management costs and fees.
Financial instruments can be provided by the EU through financial intermediaries in Member States under shared management to support their policies and programmes. Start-ups, micro companies, and larger businesses can all benefit from this type of funding. There are various types of financial instruments: equity and debt, loan guarantees, venture capital and risk sharing facilities. The EU has doubled the use of ESIF financial instruments in the programming period from 2014 to 2020 compared to 2007-2013.
The ‘Annual Summary Report on the implementation of financial instruments’ presents data on the progress made in financing and implementing financial instruments supported by European Structural and Investment Funds in the 2014-2020 programming period (until 31 December 2020). It is based on data reported by the managing authorities in accordance with Article 46 of Common Provisions Regulation (EU) No 1303/2013 of the European Parliament and the Council (CPR), the Commission Implementing Regulation (EU) No 821/2014, and fund-specific regulations.