On the 30th June 2016, the European Commission and the European Investment Fund (hereafter referred to as “EIF”) launched a € 121 million guarantee initiative to support SMEs in the cultural and creative sectors via financial institutions. The Commission expects that over the next six years, this recently announced initiative will create in excess of €600 million worth of bank loans in the targeted sectors.
This project which is established under Creative Europe will be managed by the EIF on behalf of the European Commission and its aim is to strengthen the financial capacity and competitiveness of entrepreneurs operating in the entertainment industry.
This initiative allows the EIF to offer free of charge guarantees and counter-guarantees to a number of financial intermediaries with the aim to enable them to provide more debt finance to entrepreneurs in the cultural and creative sphere. This scheme is expected to benefit more than ten thousand SMEs in a wide range of sectors including audiovisual, music, festivals, literature, architecture, archives, cultural heritage, design, performing arts, radio and visual arts. European SMEs should start to benefit from this new scheme as early as from the end of this year.
According to EU figures, the creative and cultural sector employs more than seven million people across the EU and the majority of companies that operate in this sector are small and have limited access to credit. Factors influencing SME’s access to credit include the intangible nature of their assets and collaterals, the limited size of the market as well as uncertainty and lack of financial intermediary expertise in dealing with the sector specificities. As part of this project, financial intermediaries shall be provided training to comprehend better the needs of the cultural and creative sectors, with the aim to increase their involvement with the targeted sectors.
The objective of this scheme is to grant SMEs the opportunity to benefit from loans which they would normally not have access to. Commissioner for the Digital Economy and Society Gunther H. Oettinger welcomed this new initiative and stated: “Creative minds and companies need to experiment and take risks to thrive, for our society and for our economy. We are helping them to get the bank loans they would normally not get”.
EIF Deputy Chief Executive, Roger Havenith commented that: “Helping business to scale up and access market-based financing solutions is high on the European Commission’s agenda. Providing credit risk protection and capacity building for finance providers are two essential ingredients in the recipe for support for SMEs in the cultural and creative sectors.
The Cultural and Creative Sectors Guarantee Facility which we are signing today will help SMEs from the film to festival and music to museum arena across Europe to start up and develop.”
