SSMMEE aacccceessss ttoo € 995522 mmllnn EEUU ffuunnddss rreemmaaiinnss uunnttaappppeedd
Small and medium size enterprises (SMEs) in Cyprus will be able to tap into a pool of EUR 952 mln, primarily from EU structural funds over the next six years in order to boost competitiveness and drive growth.
However, so far only one credit institution has shown interest to take part in a business fund using European Investment Bank financing, a senior SME expert at the Ministry of Energy and Trade said.
Constantinos Karageorgis, SME Envoy and Head of the European Affairs Unit said that the Ministry has already started implementing programmes totalling EUR 160 mln with a view to improving the competitiveness of SMEs. Addressing a workshop on “EU Access to Finance Day” organised by the European Commission Representation in Nicosia, Karagiorgis said that the Cypriot economy has major weaknesses and gaps in areas that promote growth and that the biggest problem for local businesses is the difficulty to access funding and funding tools.
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 more than 2% higher than the average lending rates of other EU states, while another challenge are the strict loan terms and banks’ demands for collateral, often at an excessive level.
Georgios Markopouliotis, Head of Commission’s Representation, said that the lack of liquidity is suffocates SMEs, representing about 90% of the island’s economic activity, as it does not allow them to take steps towards growth threatens their very existence.
“European programmes can play an important role in this direction”, Markopouliotis said, adding that the main EU funding tools for the 2014-2020 period include COSME, which offers guarantees and business capital to SMEs, and InnovFin of the Horizon 2020 programme 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 EUR 25,000.