On 8 March 2010 EU Employment and Social Affairs Ministers agreed on a new facility to provide loans to people who have lost their jobs and want to start or further develop their own small business: the European Microfinance Facility. The initiative, which will be operational from June 2010, is part of the EU's response to the crisis and is especially targeted at people who cannot normally obtain credit because of the economic crisis and the current lack of credit supply.
The European Microfinance Facility will have a starting budget of €100 million which is expected to leverage €500 million of credit in cooperation with international financial institutions such as the European Investment Bank (EIB) Group. This could result in around 45,000 loans over a period of up to eight years.
Micro-credit in this Facility means loans under €25,000. It is tailored to micro-enterprises, employing fewer than 10 people (91% of all European businesses), and unemployed or inactive people who want to go into self-employment but do not have access to traditional banking services. 99% of start-ups in Europe are micro or small enterprises and one third of these are launched by people who are unemployed.
Those helped under the initiative will also be able to benefit from mentoring, training and coaching as well as assistance in preparing a business plan, in close cooperation with the existing European Social Fund. These people will also have the possibility to benefit from interest rate rebates through the European Social Fund, which will make it easier for them to start their new business.
Background
As part of the EU's response to the crisis, the Commission proposed 'A Shared Commitment for Employment' on 3 June 2009 to step up cooperation between the EU and the Member States together with social partners to tackle the social and employment impact of the crisis. To follow up, the Commission proposed on 2 July 2009 to establish a European Microfinance Facility. The proposal has now been agreed by EU Member States in the Council of Ministers (QMV: qualified majority voting) and by the European Parliament.
Further information
Proposal for European Microfinance Facility and accompanying document
Audiovisual material on the European Microfinance Facility