CELEX: 51996PC0155
Language: en
Date: 1996-04-24
Title: Proposal for a Council Decision on the provision of loan guarantees for investments carried out by SMEs creating employment

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51996PC0155

Proposal for a Council Decision on the provision of loan guarantees for investments carried out by SMEs creating employment  /* COM/96/0155 FINAL - CNS 96/0107 */  

Official Journal C 146 , 21/05/1996 P. 0006

Proposal for a Council Decision on the provision of loan guarantees  for investments carried out by SMEs creating employment(96/C  146/04)(Text with EEA  relevance)COM(96) 155 final - 96/0107(CNS)(Submitted by the Commission on 24 April  1996)THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 235  thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Parliament, Whereas the European Council, meeting in Brussels on 10 and 11 December 1993, adopted the White  Paper on growth, competitiveness and employment, as the basis for action by the Community and its  Member States, supporting the development of SMEs as a key element of increased competitiveness in  the Community; whereas the White Paper, in particular Chapter 2 thereof, emphasized the importance  of SMEs for the competitiveness of European industry; and whereas specific attention has been drawn  to the need to improve access to sources of financing and credit; Whereas the Commission presented a report to the European Council in Madrid on 15 and 16 December  1995, entitled 'SMEs: a dynamic source of employment, growth and competitiveness in the European  Union`, in which in Chapter III.D, the Commission put forward a number of concrete action proposals  as regards improved access of SMEs to appropriate sources of funding; Whereas the Presidency Conclusions of the European Council in Madrid referred, in relation to SME  policy, to the need to 'improve the financial environment for them by means of better access to  capital markets and encourage development of the European Investment Fund function with regard to  SMEs`; Whereas, on 14 June 1993, the Council adopted Decision 93/379/EEC relating to a multiannual  programme of Community actions  (1); whereas, on 20 March 1996, the Commission adopted a proposal  for a third multiannual programme for enterprises, in particular SMEs, in the European Union; and  whereas this Decision should be complementary with these programmes, and should constitute part of  the integrated programme in favour of SMEs and craftsmanship; Whereas, on 22 November 1993, the Council adopted a resolution on the reinforcement of the  competitiveness of enterprises, notably small and medium-sized enterprises and craftmanship, and  the development of employment  (2); Whereas the present initiative should be in compliance with Commission Recommendation (C(96) 261  final); Whereas bank lending constitutes an important, if not predominant, form of external funding for  small and medium-sized enterprises; whereas such enterprises experience particular difficulties  when trying to obtain access to sources of loan finance, because of the fact that credit risks are  perceived to be higher than for loans granted to larger companies, and because such enterprises are  often unable to provide sufficient collateral or other forms of loan security; whereas interest  rates charged to such enterprises are generally higher than those applying to larger borrowers; and  whereas the particular difficulties of financing innovative and new technology investments should  be noted; Whereas loan guarantees constitute a cost-effective instrument to facilitate access to loans and  moreover lower the interest rates applying to these loans; whereas such guarantees should  facilitate and stimulate investments by the beneficiary enterprises and should be extended  exclusively in those cases where the loans and investments lead to the creation of employment, and  whereas both material and immaterial investments should be eligible under the scheme; Whereas investments with a transnational character deserve special attention in view of the fact  that the impediments towards gaining access to sources of loan finance are exacerbated in  comparison with other forms of investment; Whereas the European Investment Fund (EIF) was set up in June 1994 to contribute to the pursuit of  Community objectives by stimulating investment in trans-European networks and small and  medium-sized enterprises; and whereas the Community has become a member of the Fund by virtue of  Council Decision 94/375/EC  (1); Whereas the Fund is empowered to issue loan guarantees according to its statute; and whereas the  cost of the guarantee premiums corresponding to these loan guarantees can either be borne by the  beneficiary of the loan guarantee, or alternatively by a third party, notably by the Community; Whereas the payment of the guarantee premium by the Community implies that the loan guarantees are  provided at no cost to the final beneficiary, and whereas the credit risks associated with these  loan guarantees are not borne by the Community budget, but by the EIF; and whereas a significant  leverage effect can be achieved with a limited volume of budgetary resources; Whereas the EIF has indicated its willingness to participate in the implementation of this  Decision; Whereas the EIF and the Commission will enter into a Cooperation Agreement on the implementation of  this Decision, whereas the European Investment Bank (EIB) will be closely involved in the  implementation of this Decision; and whereas the loans guaranteed by the EIF will be made available  throughout the Community by a network of financial intermediaries; Whereas the budgetary resources necessary for the payment of the premiums will be paid out directly  to the EIF on a special Community account; Whereas the loan guarantees are to be made available throughout the Community and be implemented as  quickly as possible; Whereas the EC Treaty does not provide powers others than those of Article 235 for the adoption of  this Decision, HAS DECIDED AS FOLLOWS: Article 1 The Community shall provide subsidies for the purpose of paying the  cost of the guarantee premiums linked to loan guarantees extended by the EIF on a volume of ECU 1   000 million of loans, subject to the availability of appropriations written into the Community  budget. Only loans for investment projects involving the creation of employment, and extended to  small and medium-sized enterprises, shall be eligible. Particular priority shall be given to small  enterprises. The guarantees shall apply during the whole life of the loans and shall in general cover 50  % of  the size of the loans. They shall be extended by the EIF under the usual terms and conditions  applying to its guarantee operations. For investments with a transnational character, the cover  rate may reach up to 75  % of the size of the loans. Article 2 The scheme shall operate for an initial period of up to 24 months from the date of its  adoption. The scheme shall be administered by the EIF on behalf of the Community, exercising the  same diligence as for operations carried out from its own resources. The detailed terms and conditions for implementing this Decision, notably as regards the monitoring  of employment creation, shall be laid down in a Cooperation Agreement between the Commission and  the EIF. Article 3 The Commission shall inform the European Parliament and the Council on the  implementation of this Decision. The Commission shall, notably on the basis of the information made  available by the EIF, and within 18 months at most from the date of its adoption, provide an  evaluation on the overall utilization of the scheme and its impact on the creation of employment  and on investment, notably for the purpose of assessing possible future action beyond the initial  period. (1) OJ No L 161, 2.  7.  1993, p. 68.  (2) OJ No C 326, 3.  12.  1993, p. 1.  (1) OJ No L 173, 7.  7.  1994, p. 12.