WOERDEN, The Netherlands—Last Thursday the European Commission proposed a 100 million euro micro finance facility to provide micro credit to small businesses. The new facility is one of the actions taken by the Commission to stimulate employment in its member states. The EU states are expected to lose 3.5 million jobs this year because of the economic downturn.
The current economic downturn started as a financial crisis prompted by severe liquidity problems-- banks stopped lending to each other, businesses and customers. The Commissions micro finance facility will provide loans under 25.000 euro and is tailored for existing small businesses, Europe’s 21.4 million unemployed, inactive people and young people who want to start their own small business.
Ninety-one percent of all European businesses are micro enterprises (businesses having fewer than ten employees). Of all the start-ups in the EU, ninety-nine percent of the businesses are micro or small enterprises and one third of these are launched by unemployed people.
“In the current recession, we want to offer a new start to the unemployed through easier access to credit to set up or develop new businesses. And we want to help small businesses to develop further despite the crisis. This will help create new jobs.” said Employment and Social Affairs Commissioner Vladimír Špidla.
The loans will be combined with additional support measures such as training, coaching and assistance in preparing a business plan. When combined with funding from international financial institutions, particularly the European Investment Bank Group, the potential is €500 million for the EU micro credit facility.
The Commission proposal will be discussed and needs to be approved by the EU Member States at the Council of Ministers and the European Parliament. The Commission expects the new “Progress Microfinance Facility” to be operational in 2010.
The current economic downturn started as a financial crisis prompted by severe liquidity problems-- banks stopped lending to each other, businesses and customers. The Commissions micro finance facility will provide loans under 25.000 euro and is tailored for existing small businesses, Europe’s 21.4 million unemployed, inactive people and young people who want to start their own small business.
Ninety-one percent of all European businesses are micro enterprises (businesses having fewer than ten employees). Of all the start-ups in the EU, ninety-nine percent of the businesses are micro or small enterprises and one third of these are launched by unemployed people.
“In the current recession, we want to offer a new start to the unemployed through easier access to credit to set up or develop new businesses. And we want to help small businesses to develop further despite the crisis. This will help create new jobs.” said Employment and Social Affairs Commissioner Vladimír Špidla.
The loans will be combined with additional support measures such as training, coaching and assistance in preparing a business plan. When combined with funding from international financial institutions, particularly the European Investment Bank Group, the potential is €500 million for the EU micro credit facility.
The Commission proposal will be discussed and needs to be approved by the EU Member States at the Council of Ministers and the European Parliament. The Commission expects the new “Progress Microfinance Facility” to be operational in 2010.
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