Access to EU funding important for Cypriot SMEs

Access to EU funding important for Cypriot SMEs

A workshop, hosted by the European Commission`s Representation in Cyprus on Wednesday, highlighted the significance of EU funding for local small and medium size enterprises (SMEs).

During the workshop, it was revealed by SME Envoy and Head of the European Affairs Unit of the Ministry of Energy, Commerce, Industry and Tourism Constantinos Karageorgis that only one credit institution has expressed an interest to participate in a business fund using European Investment Bank financing.

Despite the fact that the business fund is already operational, only one credit institution has expressed interest to take part, he said. The question “why that is so” should be answered, he added.

Cyprus will benefit from a total of €952 million from EU structural funds in the next six years, and the Ministry of Energy, Commerce, Industry and Tourism has already started implementing programmes totaling €160 million with a view to improving the competitiveness of SMEs, he pointed out.

Addressing the workshop entitled “EU Access to Finance Day” head of the Commission`s Representation in Nicosia Georgios Markopouliotis said that the lack of liquidity suffocates SMEs, as it does now allow them to take steps towards growth and also threatens their very existence.

He said the Representation has hosted a series of events on the matter in cities across Cyprus, noting that participation far exceeded initial expectations.

Citizens, businessmen and all those willing to dare and realise their dreams by starting an enterprise, look into and research any source which could give them a helping hand.

“European programmes can play an important role in that direction”, Markopouliotis pointed out.

He presented the main EU funding tools for the period 2014 – 2020, including COSME which offers guarantees and business capital to SMEs and InnovFin of the programme Horizon 2020 which provides guarantees for research, growth and innovation.

EU`s structural and investing funds offer loans, guarantees, business capital or grants to SMEs, he said, referring also to the programme on employment and social innovation which offers small grants of up to €25,000.

The challenge, he stressed, is how will we be able to give a chance to those for whom the European programmes were designed.

On his part Karagiorgis said the workshop offers the opportunity to Cypriot businesses to be briefed on the available tools, both on a national and European level.

The crisis, he pointed out, has revealed the Cypriot economy`s weaknesses and gaps in main areas which promote growth.

It has become evident that one of the main problems Cypriot businesses face is their difficulty in accessing funding and funding tools, he continued.

These challenges are even more apparent in new businesses and ideas at a crucial point in their development, when it might be difficult to prove their creditworthiness and sustainability.

There are specific prerequisites that need to be fulfilled in order to resolve funding problems, he said, adding that the government`s contribution in securing sufficient funding for a business activity, particularly for SMEs, should be a priority.

Cypriot businesses, Karagiorgis said, are faced with the highest lending rates in the eurozone, which are over 2% higher of the average lending rates of other European countries.

Another equally significant challenge are the strict loan terms and banks` demands for collateral often at an excessive level.

Programmes implemented using European Investment Bank resources, he pointed out cannot be as effective as expected if there isn`t effective participation of banks.

Using the €952 Cyprus has been allocated for the period 2014 – 2020 is crucial for restarting the economy, Karagiorgis said. The Ministry of Energy, he said is already going ahead with the implementation of programmes in the order of €160.

“Our goal is through these new schemes and programmes to encourage the improvement of SME competitiveness, something which constitutes a pan-European priority,” he said.