Community Research and Development Information Service - CORDIS

Programme funding

EUR 1 000 million

Official Journal Reference

C 180 of 1994-07-01
To stimulate small and medium-sized industrial or service enterprises (SMEs), particularly in the less developed regions of the Community, to adapt to the single market, and to ensure that they become internationally competitive.


In response to the recommendations of the Commission White Paper on Growth, Employment and Competitiveness, the SME initiative is established to assist small and medium-sized enterprises adapt to the single market and to improve their competitiveness.

For the purposes of this initiative, an SME is defined as an enterprise which has not more than 250 employees and either an annual turnover not exceeding ECU 20 million or a total balance sheet not exceeding ECU 10 million. In general, an enterprise may not be more than 25% owned by one or more companies not fulfilling the above criteria. However, exceptions are made for public investment corporations, venture capital companies or institutional investors (provided, in the latter case, that no control is exercised).

The measures covered by the initiative focus on seven priorities:

- Improving the production systems and the organization of SMEs primarily by intangible investments;
- Environmental considerations and the rational use of energy;
- Encouraging cooperation between research centres and SMEs;
- Facilitating access to new markets, including public markets within the single market and markets in non-member countries;
- Developing cooperation and networks between suppliers of services to the SMEs, between lead firms and SME subcontractors, and between producers, suppliers and customers;
- Strengthening vocational qualifications within SMEs related to the other priority topics;
- Improving access of SMEs to finance and credit.

Cooperation in RTD between SMEs and between SMEs and research centres, technology transfer centres, universities and training centres is to be pursued through the establishment and operation of consortia and other bodies which foster cooperative links among education and research bodies and with SMEs. In addition, aid schemes are to be established for SMEs to cover some of the expenditure resulting from participation in joint research projects carried out by more than one SME or by an SME and a research centre, university or other appropriate bodies. The aid scheme covers the following areas:

- Assistance for the purchase of equipment and know-how for applied research, experimental development, pilot projects and the introduction of innovation into products and processes, and research related to quality control;
- Approved research projects undertaken by SMEs;
- Expert studies for the technical and financial evaluation of research or innovation plans.


Eligible measures:

- Measures to improve the business know-how of SMEs:
. Grants to help SMEs identify the implications of changes in their industrial environment and to define and implement business strategy plans;
. Grants to SMEs for the preparation of their business strategy plan, including start-ups and the launching of new products, limited to the financing of intangible investments (e.g. patents, certification of quality, research, development, software) and the temporary hiring of experts;
. Demonstration measures related to the adoption of total quality systems, the development of clean technologies and clean production processes, the use of services linked to advanced telecommunications systems, and the use in companies of data processing in production processes, for example the introduction of robots and CAD-CAM systems;
. Grants for the promotion of regional, interregional and transnational cooperation between SMEs including the establishment of common services (e.g. research, design, marketing and data telecommunications networks), where appropriate with a view to establishing or reinforcing clusters of interrelated activities. These measures include support for contractual relations in the framework of cooperation agreements;
. Promotion of cooperation in RTD between SMEs and between SMEs and research centres, technology transfer centres, universities and training centres;
. Grants to improve the use by SMEs of advanced telecommunication networks, in particular as regards communications between suppliers, producers and customers;
. Grants to SMEs for the adoption of continuing training programmes within SMEs;
. Interest subsidies linked to EIB loans including EIF facilities or loans provided by other financial institutions; grants to SMEs for implementing their business strategy plan; development of equity participation funds and other innovative financial engineering instruments such as loan guarantee funds, in order to improve SMEs' access to venture capital;

- Measures to improve the business environment for SMEs:
. Promotion of cooperation between SMEs, the research community and public administrations to access technology requirements and to audit local capabilities and potential, particularly through the creation and operation of regional networks for the exchange of experience and best practice and the dissemination of R&D results;
. Developing cooperation and networks between suppliers of services to the SMEs, between lead firms and SME subcontractors, and between producers, suppliers and customers;
. Development of service suppliers for SMEs specialized in such areas as metrology and calibration laboratories, testing laboratories, research centres and centres for technology transfer, the environment and efficient energy use, etc.
. Development and networking of service suppliers in the field of public procurement which make available specialized information adapted to the needs and capacities of the regional SMEs in order to facilitate their entry to public sector markets in the region, the Member State or in other countries.


The measures covered by the SME initiative are to be jointly financed by the Community and the Member States. Those Member States wishing to benefit from the initiative are invited to present proposals for support in the form of operational programmes or global grants to the Commission by 1 November 1994. In accordance with the rules governing the Structural Funds, these proposals must include a general appreciation of the situation indicating the objectives to be attained and should include a timetable, criteria and procedures for implementation, monitoring and assessment. During the preparation stage, the Commission will offer technical support to assist the Member States in the identification of priority measures, and in relation to the definition of the mechanisms of implementation.

The Community's financial contribution to selected proposals is in the form of loans and grants funded from the Structural Funds. The total contribution of the Structural Funds for the period 1994-99 is estimated at ECU 1000 million, of which ECU 800 million is reserved for Objective 1 regions. The remaining ECU 200 million should be spent in Objective 2 or 5(b) regions. These stipulations do not prevent SMEs outside these areas participating in networking activities linked to the initiative.

Community assistance may be granted to either a central government administration, or in the form of global grants directly to decentralized organizations responsible for implementation, including organizations responsible for managing transnational actions which involve expenditure in several Member States.

Cooperation between beneficiaries will be encouraged both within and between Member States, to foster the exchange of experience, the dissemination of best practice, joint operations and comparative evaluations. The Member States are required to take account of this in the preparation and subsequent management of the programmes.

The level of Community funding to individual operational programmes or for global grants will take account of the relative economic importance of SMEs in the regions concerned and the quality of the proposal. In assessing the quality of the proposal, the Commission will take into account the following elements in particular:

- The business strategy plans which condition the granting of a part of the aid for SMEs;

- The analysis of business services available in relation to present and possible future requirements, and proposals for the development of networking with services available elsewhere in the Community;

- The establishment of structures suitable for encouraging dialogue between social partners, for sharing experience, for the transfer of know-how, as well as for local, interregional and transnational cooperation;

- Inclusion of measures promoting greater employment of women in SMEs, and taking account of their special training needs.


The SME programme was established by a Decision of the European Commission, meeting on 15 June 1994, in accordance with the provisions of the Regulations governing the Structural Funds.
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