Brussels, 30/06/2009 (Agence Europe) - On Thursday 2 July, the Commission will adopt a draft decision to set up a microfinance facility providing microcredit and guarantees to micro-businesses, the unemployed and people who want to start up their own businesses. This new financial facility will have an initial budget of €100 million, which could leverage more than €500 million in a joint initiative with international financial institutions, particularly the European Investment Bank Group (EIB). This should result in around 45,000 loans over eight years. This new facility is expected to be backed up by the interest rate rebates from the European Social Fund (ESF) and the new EIB/Commission microfinance facility.
This proposal follows the Commission's communication adopted on 3 June, “Shared Commitment for Employment” (EUROPE 9912) and will be discussed by member states at the EU's Employment and Social Affairs Council (EPSCO) and the European Parliament, which will adopt it jointly. The Commission hopes that this new access facility for microcredit will be operational in 2010.
Micro-credit in the EU means loans under €25,000. It is tailored to micro-enterprises employing fewer than 10 people (91% of all European businesses) who have difficulty obtaining credit to help their cash flow. It is also aimed at the unemployed or those wanting to start their own businesses but who do not have access to the usual banking services. The Commission points out that 99% of start-ups in Europe are micro-businesses or very small enterprises and that a third of them were created by the unemployed.
The economic and financial crisis is expected to lead to 3.5 million job losses in 2009 and has seen restricted access to credit and capital needed for starting up a company. The unemployment rate is expected to reach 10% in the European Union in 2010. Faced with such a situation, the Commission aims to give a new opportunity to those who have lost their jobs due to the recession by providing loans for company start-ups and creating new kinds of jobs in the social economy. This new microfinance is expected to help provide resources to those who want to set up a business, and who only need a limited loan but have few opportunities for obtaining one from a bank as they may represent a higher risk (banks have been reluctant to lend since the recession). (G.B./transl.rh)