No C 178/4 Official Journal of the European Communities 5.7.83 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Decision empowering the Commission to help finance innovation 
within the Community 
(Submitted by the Commission to the Council on 7 June 1983) 
THE COUNCIL OF THE EUROPEAN 
COMMUNITIES, 
Having regard to the Treaty establishing the 
European Economic Community, and in particular 
Article 235 thereof, 
Having regard to Council Decision 83/200/EEC of 
19 April 1983 empowering the Commission to 
contract loans under the New Community Instrument 
for the purpose of promoting investment within the 
Community ('), and in particular Article 2 thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European 
Parliament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas the introduction and propagation of 
innovation is a stage in the adaptation of production 
structures, which the European Council has 
acknowledged by calling for the development and 
strengthening of a Community-wide policy on 
technology and innovation; 
Whereas innovation involves an abnormally high risk, 
deferred profitability, and the need for a very large 
market; 
Whereas small and medium-sized businesses are 
a source and vehicle of innovation, particularly in 
fields such as new information technologies, 
biotechnologies, energy technologies, food-processing 
technologies, flexible manufacturing systems and new 
materials; 
Whereas innovative small and medium-sized 
businesses encounter specific financing difficulties 
(») OJ No L 112, 28. 4. 1983, p. 26. deriving both from their restricted access to capital 
markets, their under-capitalization and the absence or 
inadequacy of security they can offer, and from the 
inherent characteristics of innovative investment; 
Whereas a Community measure to promote the 
financing of innovative small and medium-sized 
businesses, which would supplement existing national 
schemes or spur national measures, would add 
momentum to the overall volume of resources 
allocated to the financing of innovation within the 
Community; 
Whereas a Community measure should also 
encourage the supply of own funds to innovative 
small and medium-sized businesses; whereas financial 
intermediaries should be encouraged to participate, 
by sharing the risk which they take in financing 
innovation; 
Whereas a Community measure should finance, in 
priority, projects of a Community character resulting 
from Community research and development 
programmes or from cross-border cooperation within 
the Community; 
Whereas, by taking the form of a combination of a 
loan from borrowed resources with a grant from 
budgetary resources, a Community measure would be 
adapted to the introduction on the market of a new 
product, process or technology, while being the most 
effective method in view of the volume of the 
budgetary resources committed; 
Whereas it is necessary to authorize a specific tranche 
of the borrowings; 
Whereas it is necessary to adopt specific provisions in 
order to take account of the specific characteristics of 
innovative projects and of innovative small and 
medium-sized businesses; 
Whereas borrowings under the New Community 
Instrument are guaranteed by the budget; 
Whereas, to take due account of the characteristics of 
this kind of project, relevant appropriations should be 
5. 7. 83 Official Journal of the European Communities No C 178/5 
entered in the general budget of the Communities 
following budgetary procedures; 
Whereas the European Investment Bank (hereinafter 
called 'the Bank') has expressed its readiness to par­
ticipate in implementing this action, 
HAS DECIDED AS FOLLOWS: 
Article 1 
A tranche of borrowings is hereby authorized, the 
amount not to exceed the equivalent of 100 million 
ECU of principal. 
Article 2 
The borrowings contracted pursuant to Article 1 
hereof shall be used exclusively to fund, under the 
name of 'European Innovation Loans', innovative 
projects in sectors which introduce new products, 
devise new processes or apply innovatory 
technologies. These loans shall benefit small and 
medium-sized enterprises established in the 
Community, and shall be granted via appropriate 
financial intermediaries. 
Notwithstanding Article 3 (2) and Article 5 of 
Decision 83/200/EEC, the European Innovation 
Loans shall be granted in accordance with the 
following provisions. 
Article 3 
The European Innovation Loan shall be finance: 
— normally for a period of 10 years; 
— for which no security is required from the 
beneficiary business, 
— of which the interest service during the first years 
is borne by the general budget of the European 
Communities; the discounted cost of this interest 
moratorium may not exceed 20 % of the 
principal, 
— which can only be granted to a business if the 
financial intermediary also grants to the business, 
at the same time and at the intermediary's risk, an 
equivalent amount either as own funds or as 
finance with characteristics close to those of the 
European Innovation Loan. 
In case of default by the innovatory enterprise, 
neither the Commission nor the financial 
intermediary shall press their claims for the 
repayment of their debts before those of ordinary 
creditors have been settled. 
Article 4 
The European Innovation Loan may also be granted 
to the financial intermediary if it is to be used to provide capital for a small or medium-sized 
innovatory enterprise. In this case, the intermediary 
shall service the European Innovation Loan and bear 
the underlying risk and shall provide the same 
amount in the form of a shareholding or in equivalent 
form. 
Article 5 
The cost of the interest moratorium offered during 
the initial years of the European Innovation Loans 
shall be entered in the general budget of the 
European Communities and the equivalent amount 
transferred to the Bank, concomitantly with the 
payment of loans. 
Article 6 
Pursuant to this Decision the Bank shall be 
empowered to grant and administer European 
Innovation Loans as well as the interest moratorium. 
This shall be covered by a cooperation agreement 
between the Commission and the Bank. The Bank 
shall carry out all operations deriving from the 
powers received in the name, on behalf and at the 
risk of the Community. 
The Commission shall decide upon the eligibility of 
the financing requests. For requests approved by the 
Commission, the Bank shall grant the European 
Innovation Loans in conformity with this Decision, 
and according to the criteria laid down in the 
cooperation agreement. 
In order to implement this Decision: 
— financial intermediaries' requests shall be 
submitted simultaneously to the Commission and 
to the Bank. The Bank shall obtain a favourable 
opinion from the Member State concerned, 
— the Commission and the Bank shall jointly 
conclude the financing contracts with the inter­
mediaries, 
— the financial intermediary shall render account to 
the Bank, which shall inform the Commission, on 
the use of the funds transferred to him. 
Article 7 
Two years at the latest after adoption of this 
Decision, and in any case when loans granted total 80 
million ECU, the Council shall examine, on the basis 
of a report by the Commission, whether the principles 
and conditions of the scheme are still adapted to the 
needs which led to their creation.