Opinion of the Economic and Social Committee on JEREMIE (Joint European Resources for Micro-to-Medium Enterprises)
Date: 2006-03-15
Institutions: European Economic and Social Committee
Subjects: EU financing, EU initiative, aid to undertakings, credit, financial institution, small and medium-sized enterprises

9.5.2006

EN

Official Journal of the European Union

C 110/39

Opinion of the Economic and Social Committee on JEREMIE (Joint European Resources for
Micro-to-Medium Enterprises)

(2006/C 110/08)

On 20 December 2005 Margot Wallström, member of the European Commission, asked the European
Economic and Social Committee, on behalf of the European Commission, to draw up an opinion on the
joint initiative: JEREMIE (Joint European Resources for Micro-to-Medium Enterprises).

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 24 February 2006. The rappor-
teur was Mr Pezzini.

At its 425th plenary session, held on 15 and 16 March 2006 (meeting of 15 March), the European
Economic and Social Committee adopted the following opinion by 142 votes to one with two abstentions.

1. Conclusions and recommendations

The

European

1.1
Social Committee
welcomes the Commission document presenting the JEREMIE
programme (1) (Joint European Resources for Micro-to-Medium
Enterprises) with keen interest.

Economic

and

is grateful

The Committee

1.1.1
to Danuta Hübner,
Commissioner responsible for regional policy, as well as DG
Regio and the EIF, for the efforts they are making in developing
this delicate programme and for the support they have given to
the Committee's work.

1.1.2
The EESC has always supported Commission initiatives
to facilitate access to credit for micro-enterprises and SMEs,
being convinced — as is the European Parliament — that
aspect has always represented a weak point for smaller busi-
nesses.

The EESC has also emphasised the need for the broad-
1.1.5
the social partners in all enterprise-
based involvement of
related problems and,
in particular, those concerning credit,
since they have a considerable impact on social well-being and
development.

Throughout the 1990s, DG XXIII (4) sought to act on
1.2
credit problems, working in close contact with organisations
representing the crafts sector and SMEs. The successive Euro-
pean Conferences of Crafts and Small Businesses (SME) (5) and
the numerous preparatory meetings (an average of 10 in the
run-up to each conference, attended by hundreds of small busi-
nesses) have:

— helped to finalise European Investment Bank (EIB) action in

the form of investment in SMEs;

— laid down the preconditions for the creation of the Euro-

pean Investment Fund (EIF) (6);

— brought about legislation on payment periods;

1.1.3
Strengthening small businesses represents a funda-
mental element in the Lisbon strategy, since it ties in with inno-
vation, generates stable employment and contributes to the
ongoing training of the workforce.

— prompted the Luxembourg Extraordinary European Council
in part

to uphold and relaunch employment in Europe,
through specific credit initiatives for small enterprises (7);

In numerous opinions, and especially those drawn up
1.1.4
since 1982 (2), the EESC has highlighted the efforts made by
the Commission, DG XXIII (3) in particular, to help businesses
improve their links with the credit system, particularly banks.

(1) JEREMIE: a joint REGIO-EIB group initiative for supporting
improved access to finance for SME and micro-enterprise develop-
in the regions (Document 2 of 21 November 2005),
ment
presented at the Conference on Financing growth and cohesion in the
enlarged EU, held in Brussels on 24 November 2005.
(2) 1982: European Year of SMEs and the Craft Industry.
(3) In the wake of the problems which emerged in 1982, the Commis-
sion also set up a Task Force, headed by Commissioner Cresson, to
gear European policies to the needs of SMEs. In the course of the
second half of the 1980s, the Task Force became DG XXIII.

— enabled the Commission, with the direct involvement of the
EIB and the EIF, to launch the Growth and Employment Initia-
tive (1998-2000), based on the measures decided on in
Luxembourg;

(4) Now the Directorate-General for Enterprise and Industry (Enterprise

DG).

(5) Held in Avignon in 1990, Berlin in 1994 and Milan in 1997.
(6) See footnote 28.
(7) On 20 and 21 November 1997, the Luxembourg Extraordinary
European Council, whose agenda contained a single item – employ-
ment – launched three practical initiatives to help businesses stay
competitive in the markets, and called upon the Commission to put
sector and
forward proposals
promote employment in that field. The three initiatives were: the
ETF Start-Up Facility, the JEV (Joint European Venture) and SME-
Guarantee Facility.

that would boost

the business

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— made it possible for the multiannual programmes for enter-
prise and entrepreneurship,
in particular for SMEs, to be
drawn up, with special emphasis on loans. The fourth such
programme (2005-2005), which has been extended to
cover the whole of 2006, was adopted on 20 December
2000;

— laid the groundwork for the establishment of the Competi-
tiveness and Innovation Framework Programme (CIP) (8),
which is geared to SMEs and has clearly-defined aims;

— explained to SMEs the need for them to form networks in
order to achieve economies of scale, greater market pene-
tration capacity and,
lastly, the critical mass needed for
both innovation processes and to build up their leverage
to be done
institutions. Much remains
with financial
regarding networking.

On the basis of the experience outlined above, the
1.2.1
EESC believes that it would be appropriate, not least in view of
the new programming for 2007-2013 and the Lisbon objec-
tives, to provide more information on the new programmes,
especially those aimed at micro and small enterprises, by
holding meetings in the Member States with representatives of
the social partners and civil society.

However,

in spite of

the interventions and efforts
1.2.2
organised over the last 20 years, many regions in the EU-25,
especially the most disadvantaged ones, lack a project capable
of coordinating and fine-tuning the many loan instruments
currently in existence.

1.2.2.1
Close to four million businesses — 20 % of those in
existence — judge that poor access to finance is a serious
barrier to their growth (9).

to use Community financial

Only a few tens of thousands of undertakings have
1.2.2.2
instruments (10),
been able
revealing the yawning gap between the way the issue is
presented and the practical results. This prompts consideration
of the practical possibilities of intervening with systems which
can boost the involvement of financial institutions and amplify
the results.

1.2.2.3
The EESC is aware of the need to step up efforts to
improve the information on credit opportunities provided by
the Commission, the EIB, EIF, EBRD and national and regional
authorities. Micro and small enterprises are very often excluded
–in part, moreover, through their own fault — from channels
of information.

(8) C.f. COM(2005) 121 final.
(9) Consultation document on the Community programme on enter-
prise and competitiveness, 2006/2010, DG Enterprise, 2004,
point
http://europa.eu.int/yourvoice/consultations/index_ht-
m#open.

46,

(10) Ibid., point 118.

JEREMIE could therefore be put forward as a ‘smart’ tool

1.3
for coordinating and rationalising existing opportunities.

1.3.1
The JEREMIE initiative falls within the scope of the
Cohesion Policy in Support of Growth and Jobs: Community Strategic
Guidelines. The Committee's position on this may be
summarised as follows:

— it is necessary to support non-grant instruments such as
loans, secured debt financing for subordinate debt, conver-
tible instruments (mezzanine debt) and risk capital
(e.g.
seed capital and venture capital);

— grants should be used to build and maintain infrastructures
technology transfer
investment

that facilitate access to finance (e.g.
offices,
readiness programmes);

‘business angels’ networks,

incubators,

— guarantee and mutual guarantee mechanisms should also
be supported,
in particular to facilitate access to micro-
credit by SMEs. The EIB and EIF (11) could provide valuable
input in this regard;

— there must also be outreach to specific groups such as
young or female entrepreneurs, or those from disadvan-
taged groups, including ethnic minorities;

— it is particularly important to work closely with the EIF in
view of the expertise it has developed over a number of
years,
in order to give SMEs the required support, while
developing the European risk capital market at the same
time;

— the use of debt securitisation (12) should be supported and
expanded in order to boost the lending capacity of credit
consortia.

the

The Committee
for

emphasises
importance of
1.3.2
Commission support
the JEREMIE initiative not only
outwardly, but also through internal coordination between
small- and
services managing actions
medium-sized enterprises, by setting up a ‘JEREMIE focal point’
to serve as a unit informing and coordinating between the
various actions in order to optimise the results.

to support micro,

that

The EESC believes

1.3.3
the Commission should
provide a report every two years to the European Parliament,
the Council, the Committee of the Regions and to the European
Economic and Social Committee on the progress and efficacy
of the programme, with a view to extending this important
experience to other sectors.

(11) See also footnote 29.
(12) An arrangement under which a party's own risk capital may be
sold to other parties, thereby increasing the original party's capacity
for granting loans to SMEs. See also footnote 56.

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1.3.4
Lastly, the Committee recommends that full compli-
ance with the principles of economy, efficiency and transpar-
ency be ensured in tendering and selection procedures,
management of the regional holding funds and accreditation of
the financial intermediaries charged with project management.
In particular,
full compliance with the relevant Community
legislation must be ensured, even in cases of exclusive rights. It
must be possible to impose penalties, dismiss
inefficient
holding funds and revise the lists of accredited financial inter-
mediaries.

2. Reasons

2.1
The EESC has repeatedly underlined the role — not only
economic, but also social — played by small businesses in their
respective Member States, and has drawn specific attention to
including those issued in 1992 (13),
this in several opinions,
1997 (14), 2001 (15) and 2003 (16), together with others on the
European Charter for Small Enterprises (17).

2.1.4
Access to credit is therefore a precondition for setting
up a business, and is a fundamental requirement for the growth
and development of micro and small businesses, who feel the
restrictive effects of the credit system more clearly and more
strongly than large companies.

2.1.5
Direct contact with businesses and their problems, and
an understanding on their part of the opportunities provided
by the credit system — especially those located in the areas
where the businesses are operating — is the only way to
harness the positive effects of credit. This will prevent excessive
inflexibility in funding arrangements and the ensuing increase
in risk, with regard inter alia to developments concerning the
Basle Agreements. Businesses must therefore find their own
financial balance and identify the necessary tools.

Self-financing plays a key role, even if small compa-
2.1.6
nies can rarely achieve their own investment plans with this
instrument. The following are necessary in 90 % of cases:

2.1.1 Micro and small businesses perform an essential role
in the European economy. They number some 25 million,
represent 99 % of all businesses and employ nearly 95 million
people, providing 55 % of all jobs in the private sector (18).

— launching information and consultancy initiatives to facili-
tate the choice of type of capital between the available alter-
natives
instruments or mezzanine
finance);

(risk capital, debt

2.1.2
These figures highlight the importance and the role of
SMEs in the Lisbon strategy, as well as the need to establish a
strong partnership with the representatives of the social part-
ners, in order to be in a position to generate new forms of
cooperation (19). Their purpose is to put into practice the social
and economic values underpinning Europe's social market
economy (20).

2.1.3
ment phases of micro and small businesses are,
importance:

The main problems affecting the start-up and develop-
in order of

— financial and credit considerations,

— slow and costly bureaucracy,

— labour market-related features (definition of occupational
profiles and reinforcement of occupational training, neces-
sary for the workforce's capacity for change, and in order
to increase companies' business scope and job opportu-
nities).

(13) SMEs and craft industries, OJ C 332 of 16.12.1992.
(14) Craft industries and small- and medium-sized enterprises, OJ C 158 of

26.5.1997.

(15) OJ C 221 of 7.8.2001.
(16) The role of micro and small enterprises in Europe's economic life and

productive fabric, OJ C 220 of 16.9.2003.

(17) OJ C 48 of 21.2.2002.
(18) Observatory of European SMEs, 2003/7, EU-25.
(19) C.f.

for example experiments with bipartite entities throughout

Italy and other European countries.

(20) See the EESC opinion on the Partnership for implementing the Struc-

tural Funds, OJ C 10 of 14.1.2004, p. 21.

— selecting the financial tools and methods to use.

risk capital

Among these

2.1.7
is often
instruments,
mistrusted by small enterprises. Only 5 or 6 % of the myriad
micro (21) and small (22) businesses (90 % of which are indivi-
dual companies or partnerships) make use of venture capital. If
take-up is not to remain negligible, new forms of venture
capital must be devised which can also apply to individual
companies.

2.1.8
finance and small enterprises can be summarised as follows:

The priorities identified to bridge the gap between

— ensuring that higher quality services are provided by credit

agencies;

transparency

— promoting a greater role for credit agencies in providing
consultancy throughout the life of the enterprise, to encou-
company
rage
accounts. Small businesses in particular need this assistance,
to become corporate enterprises, or to prepare to use
venture capital, and, for some of them, to be floated on the
relevant trading index (23);

and the publication of

(21) 23 million in EU-25, SME Observatory, 2005.
(22) 1.8 million, SME Observatory, 2005.
(23) In Italy, the SME index is called STAR.

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— reducing the ties to security required for granting loans.
This means better incentives for using the instruments
provided by financial engineering. An example of such
good practice would be the credit consortia which exist in
many European countries. Although subject to obtaining a
bank loan, these instruments should be encouraged and
supported, and JEREMIE can make a key contribution here;

In short, if efforts are not made to reverse this trend,
2.2.4
in part by the financial mediation of
those tools which
JEREMIE can deploy alongside the more conventional EIB and
EIF ones (29), the poorer regions will be condemned to conti-
nuing long-term poverty.

— bringing the cost of money into closer line with the stan-

dards applied to large companies (24).

2.1.9
The analyses and evaluations of needs and potential,
under the JEREMIE preparatory phase, should be carried out in
individual EU regions with the real involvement of the relevant
economic and social partners, as part of an effective and
responsible partnership.

2.2 The regional dimension

2.2.1
The degree of difficulty in gaining access to loans,
outlined above, varies according to the level of economic and
market development. The convergence regions (25), which have
the greatest need of credit
instruments in order to boost
employment through entrepreneurship, are in fact those where
access to credit is most difficult, and where interest rates are
higher than those applied in more developed regions (26).

EIB loans, granted in rotation (27) to trustee banks to
2.2.2
be divided among SMEs at variable, but limited, rates (28), are
used primarily by banks operating in developed regions, where
competition between banks is greater and granting EIB loans is
a means of keeping loyal customers.

2.2.3
Since there are few banks, especially of the cooperative
or popular credit type, in the less developed regions, there is
less competition in the banking sector and little awareness of
small operators: as a result, it is rare that the valuable instru-
ments provided by the EIB are used in such regions.

(24) Avoiding the use of cross-selling.
(25) There are 254 NUTS II

these
(approximately 100 convergence) have income levels of less than
75 % of the Community average.

level regions in the EU-25. Of

(26) Interest rates in the less developed regions are, on average, 3 %
higher than those in more developed regions (source: Artigiancassi,
Italy).

(27) Usually for renewable amounts of EUR 30 or 50 million.
(28) Generally one percentage point above Euribor 6 months.

2.2.5
In order to provide loan back-up, especially in the
convergence regions, a JEREMIE desk could be organised at the
EIF with the task of supporting guarantees on bank loans with
surety instruments, via credit consortia or other bodies which
are active in the less advantaged regions in particular.

2.3 The social dimension of credit and financial engineering

2.3.1
The problem of access to credit for micro-businesses,
as well as SMEs, puts the spotlight on a number of market
shortcomings:

— financial

institutions are responsible to their boards for
the boards, unsurprisingly, are often
their management:
reluctant to grant loans to small, unknown enterprises with
non-existent or sketchy accounts and thus potentially at
risk of insolvency;

— bank officials are often unfamiliar with ‘business risk’ and
feel more comfortable granting loans when collateral (real
estate or personal sureties given by relatives or
third
parties) is in place. Personal sureties are very — perhaps
too — common, especially for loans granted to women or
young entrepreneurs;

— dividing the overall amount of credit among a very large
number of small businesses is far more costly to the banks,
in terms of manpower and administrative burden,
than
managing loans for much larger amounts granted to a
small number of large, well-known companies with exten-
sive real estate;

— competition between financial institutions, which helps to
enhance what is available on the market, is strong in the
rich regions but weak in the convergence regions,
i.e.
exactly where a wider range of products at lower rates
would be most useful in meeting the requirements of local
— often small-scale, less powerful — entrepreneurs.

(29) The EIF (European Investment Fund) was set up in 1994 with two
objectives: (1) to support the European networks, and (2) to facili-
tate access to credit for SMEs. The EIF shareholders are: the EIB, the
European Commission and a large number of European banks. In
recent years in particular, support for micro and small businesses
has been a hallmark of the EIF (c.f., amongst others, the SME Guar-
antee programme, which – together with JEV and ETF Start-Up –
stemmed from the 1997 Luxembourg European Council.

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2.3.2
ings with actions which:

The aim therefore is to make up for market shortcom-

2.4 The

function of

loan consortia,

financial

engineering and

JEREMIE

— are compatible with state aids;

— can be used with financial engineering,

through funds

provided by EIF-managed multiannual programmes (30),

2.4.1
Granting large numbers of small loans, as required by
business start-ups and by European micro and small enter-
prises, is subject to:

— are already part of the CIP,

— are provided by the Structural Funds, and

— are all to be coordinated by JEREMIE.

— the availability of funds at reasonable cost on the money

market;

The Lisbon strategy was relaunched at

the March
2.3.3
2005 European Council, and the governments and economic
and social partners were urged to act in three priority areas:

— credit institutions being organised in such a way as to be
present throughout a given territory, with offices close to
businesses;

— making knowledge and innovation engines of sustainable

— a culture which attunes bank officials to the needs of small

growth;

entrepreneurs;

— making the EU an attractive area in which to invest and

work;

— boosting employment and entrepreneurship in order to

develop cohesion.

States'

The Member

2.3.4
expenditure on supporting
employment and job creation is sometimes considerable, but is
justified by the social results (31). In the event of a universal
loan of EUR 20 000 to half of the EU-25's SMEs — i.e. some
12 million businesses — the probable losses due to insol-
vency (32) would not exceed EUR 6.5 billion, representing
0.07 % of EU-25 GDP; at the same time, granting loans across
the board would enable most enterprises to consolidate their
position and to innovate with regard to their processes and
products.

2.3.5
If loans were granted through the intermediary of loan
consortia, capable of absorbing 50 % of insolvencies, the losses
would be shared equally (50-50) between the relevant consor-
tium and bank.

2.3.6
A culture of accepting that credit has a social function
enables the necessary financial engineering tools to be devel-
oped with a contribution from public funds, European funds
and solidarity funds contributed to loan consortia by businesses
themselves, either when registering with a consortium or in the
form of a percentage of bank interest (33).

(30) The EIF is currently managing three projects: (1) initial help for
(2) ETF Start up (European
undertakings in the start-up phase;
technologically advanced businesses),
Technology Facility for
contributions to company funds, mezzanine investment (3) SME
guarantees (loan guarantees, micro-credit, own funds, debt securiti-
sation).

(31) Sviluppo Italia, the official body concerned with job creation in the
south of Italy on behalf of the Italian State, has calculated the
average cost of creating one job to be EUR 40 000.

(32) Average insolvencies for micro and small enterprises are no higher

than 3 % of the loans granted.

(33) Generally 0.50 %.

— the possibility of risk-sharing with other partners (financial

engineering);

— the ability to keep management costs down,

in order to

reduce the interest rates applicable to the loans granted.

Some solutions to these problems can be found in
2.4.2
existing instruments, which should however be put to better
and more extensive use:

— EIB funds, where they have been used, have proved to be a
highly useful tool in facilitating access to credit for micro
and small businesses. Those banks which have asked to
become ‘EIB trustees’ have obtained loans, on a rotating
basis, at an advantageous rate (34). The reduced spread
granted to banks (115 business points) has meant that only
banks operating in rich regions, with strong competition,
have used this form of financing which is helpful for busi-
nesses, but relatively unprofitable for banks. This has not
occurred in the convergence regions, confirming the view
that poorer areas enjoy fewer development opportunities
than richer ones.

— Cooperative credit bank arrangements are more common in
regions with a high level of economic development. This
factor is a further serious obstacle to access to credit in
regions which are lagging behind. JEREMIE could help to
devise, sustain and introduce forms of credit using financial
engineering tools and involving sectoral organisations in
those regions where training processes and the credit
system are the foundations of development.

(34) On average, 15 business points lower than Euribor 6 months, with
the obligation to grant the loan to businesses at a rate on average
no higher than 100 business points (one point) above Euribor 6
months.

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— In order to foster a culture of awareness of small enter-
prises, it is very important to support the efforts of sectoral
organisations, especially those engaged in social dialogue,
so that they can help apply to the more disadvantaged
regions those positive experiences which have often been
tried out previously in the richer ones. JEREMIE could also
offer itself as an active partner in this kind of action.

— Credit consortia — in those countries where they exist —
are a key element for both carrying out financial engi-
neering and for fostering a culture aware of credit's social
function, which contributes to making Europe as a whole a
social market economy, the keystone of which is employ-
ment (35). If JEREMIE can rationalise and amplify what the
EU is already doing through EIB and EIF activities, it can
save many of the businesses which are currently forced to
close down every year (20 %).

— The risk evaluation carried out by credit consortia and the
ensuing cover of 50 % of the insolvencies concerning the
loans granted provides practical relief for the banks from
some of their burdens, reduces the scale of risk and in
consequence moderates the lending interest rate (36).

2.5 The function of multipliers in credit management and the func-

tion of JEREMIE

2.5.1
Over the last few years in particular, the multiplier
instrument has been analysed and used by both credit consortia
and banks to boost credit possibilities (37). Rigorous analysis of
the insolvencies picture, especially in the convergence regions,
allows the multiplier to be adjusted to match the local situation.
The percentage of insolvencies of course rises in the most
disadvantaged regions, where it can reach 10 %, while in the
richer regions, the failure rate for micro and small businesses is
of the order of 2.5 %.

2.6 JEREMIE and the CIP

The Competitiveness

2.6.1
Programme (2007-2013) (38) brings
munity measures and programmes, including the following:

and Innovation Framework
together various Com-

— measures to strengthen the competitiveness of European
industry (39), and the multiannual programme for enterprise
and entrepreneurship, and in particular
for small and
medium-sized enterprises (40),

— the Financial Instrument for the Environment (LIFE) (41),

— the multiannual programme for the monitoring of

the

eEurope 2005 action plan (42),

— the multiannual Community programme to stimulate the
development and use of European digital content on the
global networks (43),

— general rules for the granting of Community financial aid in

the field of trans-European networks (44),

— guidelines

for

trans-European

telecommunications

networks (45),

— the multiannual

programme

‘Intelligent

Energy —

Europe’ (46).

There should also be an analysis of

2.6.2
the financial
instruments included in the Fourth multiannual programme
(MAP) (2000-2005), extended until 31.12.2006), with a budget
of EUR 531.5 million (47), which is to be incorporated into the
CIP and come under the JEREMIE strategy.

2.5.2
JEREMIE can realise its potential primarily in the
convergence regions, providing credit consortia with personal
guarantees and facilitating securitisation processes, in order to
increase credit opportunities and offset the weakness of the
multiplier.

(35) Research by the Osservatorio imprese (business observatory) shows
that the rate of business failures stands at close to 20 % a year, and
failure can be traced to credit-related
that
problems (management, extension, need for innovation).

the main cause of

(36) Around 2 %.
(37) The multiplier allows possibilities of granting loans to be increased,
in proportion to the estimated percentage of insolvencies in a
given territory and to the percentage of guarantees attached to the
loans. If, in the territory, historical analysis of loan-related insolven-
cies shows a rate of less than 5 %, then it is possible, with a fund
of EUR 1 million, to grant loans to a number of people, of up to
EUR 20 million, since the million euros available means that insol-
vencies can be absorbed: 5 % of 20 million, i.e. one million. In this
case the multiplier is 20. If the guarantee granted by the credit
consortium covers 50 %, with the other 50 % being the bank's
responsibility, the multiplier rises to 40, i.e. with one million loans,
divided appropriately, can be granted to the value of EUR 40
million.

2.6.2.1

The MAP is organised around three pillars:

1st pillar: business development policy;

2nd pillar: Euro-Info-Centre (EIC) network;

3rd pillar: financial instruments.

(38) COM(2005) 121 final of 6 April 2005.
(39) OJ L 167 of 6.7.2005.
(40) OJ C 333 of 29.12.2000, as amended by OJ L 268 of 16.8.2004.
(41) OJ L 192 of 28.7.2000, as amended by OJ L 308 of 5.10.2004.
(42) Decision No. 2256/2003/EC.
(43) Decision No. 2001/48/EC.
(44) Regulation No. 2236/95.
(45) OJ L 183 of 11.7.1997 as amended by OJ L 200 of 30.7.2002.
(46) OJ L 176 of 15.7.2003.
(47) C.f. INT/261 2005, rapporteur: Mr Pezzini.

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2.6.2.2
An analysis of how the MAP financial instruments
have operated reveals which have given the best results and
which may consequently be incorporated into the JEREMIE
strategy. These instruments are by far the largest item of expen-
diture under the fourth MAP:
they
total budget (48).
accounted for 67 % of
Resources are distributed within these financial instruments as
follows:

the programme's

for example,

in 2003,

— SME-Guarantee (49): 90 % (50);

— ETF Start-up (51): 10 %.

2.6.2.3
2000, under the programme of
employment, alongside others:

These instruments were previously used,

in 1998-
initiatives for growth and

— SCA (Seed Capital Action), under the MAP 1997-2000
CREA (Capital-Risque pour les Entreprises en phase d'Amorçage,
risk capital for start-up enterprises) pilot action;

— JEV (Joint European Venture), which started in 1997 and

finished on 29 December 2004 (52).

2.6.2.4
of results.

Neither SCA nor JEV have yet yielded much by way

2.6.2.5
Approximately 178 000 SMEs had availed of the
SME-Guarantee instrument by the end of 2003 (53) (136 000
under the growth and employment programme, 32 000 under
the credit guarantee programme and 10 000 with the micro-
credit programme).

— SME-Guarantee, a mutual guarantee mechanism, already

discussed in connection with credit consortia;

— mezzanine credit (55) accessible via SME-Guarantee: this is
of great
importance to entrepreneurs since it does not
require them to cede/transfer part of the capital and can be
useful when transferring the company;

— securitisation of

risk funds (56) of banks

and credit

consortia;

— establishment of SBICs (small business investment compa-
nies programs) such as those set up in the USA in 1958,
which offer holdings and long-term credit and operate
commercially on the basis of a licence granted by the Small
Business Administration.

2.6.6
The EESC is however convinced that these interven-
tions suffer from a major problem of information and training:
the solution should involve the financial institutions, and orga-
nisations representing employees and workers, governed by the
principles of corporate social responsibility and the social
purpose of credit.

2.7 JEREMIE and tendering and accreditation procedures

2.6.2.6
had benefited from the ETF Start-up programme.

During the same period, some 240 000 SMEs (54)

It is in the Committee's view vital that Community
2.7.1
legislation on public service tendering be complied with in full,
in order to guarantee that the JEREMIE initiative succeeds.

JEREMIE

could therefore

2.6.3
continue disseminating
experience with these two financial instruments, increasing the
number of beneficiary SMEs, especially in the convergence
regions.

2.6.4
It should be borne in mind that only 0.81 % of Euro-
pean SMEs have, during these years, benefited from joint DG
Enterprise, DG Economic and Financial Affairs and EIF inter-
ventions.

2.7.2
In any case, the Commission's JEREMIE department
and/or the EIF must guarantee that the tendering procedures
comply with the principles of economy, efficiency, impartiality,
treatment and transparency. The contract documents,
equal
drawn up in advance by the Commission, must in particular
contain among the
companies or
eligibility criteria
consortia wishing to take part, the following:

for

2.6.5
It is, however, important that JEREMIE should explore
new paths, including those envisaged by the new programmes,
in the following areas in particular:

(48) C.f. Conclusions and recommendations, page 6, footnote 15 above.
(49) SMEG, SME-Guarantee.
(50) Source: EIF annual report.
(51) ETF: European Technology Facility, Start-up Scheme.
(52) Decision 593/2004/EC of 21 July 2004.
(53) Source: Fourth EIF report, first quarter 2004.
(54) Ibid, access to mezzanine finance.

— successful conduct of the relevant activities for at least five

years;

(55) Mezzanine credit is based more on beneficiary companies' expected
cash flow than on real guarantees. It can work in two ways: (1)
subordinate debt (loans at a fixed rate or index-linked rate); (2)
equity kicker (the lender/investor is entitled to a percentage share
of the increased worth of the property to which the loan refers).
Mezzanine finance mature at between four and eight years.

(56) Debt securitisation works by ceding part or all of the amount owed
to a credit consortium (or bank) to specialised financial institutions
in order to enable credit consortia in particular to boost the credit
guarantees they can offer to undertakings.

C 110/46

EN

Official Journal of the European Union

9.5.2006

— compliance with the CEN technical

standards for

the

services provided;

— possession of

the necessary technical-professional and
economic-financial capacities, measured by objective and
non-discriminatory criteria.

2.7.2.1
In the event of holding fund/2007-2015 operational
programme agreements, there must be provision for penalties,
revocation and dismissal of a holding fund on the grounds of
inefficiency, irregularity or serious failures to fulfil obligations.
Management should be monitored at two-yearly intervals, with
the support of regional economic and social partners, with
transparent procedures for the publication of reports, which
should be forwarded to the central national authorities, the
European Parliament,
the
Regions.

the EESC and the Committee of

2.7.3
Financial entities or consortia established in another
Member State or in one of the countries which has signed the
agreement on public contracts, as set out in the Annex to the
WTO Agreement must be allowed to qualify under the same
conditions as those applied to national participants, on the
basis of documents complying with the legislation of the coun-
tries in question, which demonstrate that all the requirements
for qualification are met.

2.7.4
These provisions should also apply to the accreditation
procedures for intermediary credit institutions: these must be
subject to systematic performance monitoring arrangements,
the relevant
defined in conjunction with representatives of
economic and social partners, and also to a periodic accredita-
tion review. In all cases, replacement of part of the accredited
elements must be ensured every three years.

Brussels, 15 March 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the Draft Commission Regulation
(EC, Euratom) amending Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for
the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regu-
lation applicable to the general budget of the European Communities

(SEC(2005) 1240 final)

(2006/C 110/09)

On 12 October 2005 the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned
Draft Commission Regulation.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 24 February 2006. The rappor-
teur was Mr Burani.

At its 425th plenary session, held on 15-16 March 2006 (meeting of 15 March), the European Economic
and Social Committee adopted the following opinion by 146 votes to one with one abstention.

1. Conclusions

transparency, streamlining procedures,

faster
scope: greater
responses and greater confidence in the social partners are
signs of welcome progress in public governance.

1.1
The EESC congratulates the Commission on its complex,
meticulous work on simplifying administrative procedures;
however, it notes a certain discrepancy between the state-
ment made at the beginning of the Explanatory Memorandum
(‘the following draft … deals with technical amendments which
can be introduced under the current Financial Regulation’) and
the actual scope of many of the amendments.

1.1.1 Many of the ‘technical’ amendments concerning rela-
tions with businesses and the public are ‘political’ in nature and

At

1.2
the same time the EESC stresses the need for
caution: the desire to benefit the social partners must take into
account the fact that there must be a limit to flexibility for
treasury administrators — i.e. potential losses must be set against
actual savings in that difficult but necessary exercise known as
risk assessment. This exercise may be very unpopular with
administrators but it is the only sensible path to take.