Specific Programme "Capacities": Research for the benefit of SMEs SMALL MEDIUM ENTERPRISES (SMEs) SMEs make up a large part of Europe's economy and industry. The EU's 23 million SMEs account for 99% of all businesses and contribute up to 80% of employment in some industrial sectors, such as textiles.What's the benefit for citizens:European SMEs are an essential source of growth, employment, entrepreneurial skills, innovation and economic and social cohesion. It is therefore essential to unlock the potential through research and technological innovation which will help them survive and prosper in the long run. Their closer working relationships with the research community will bring increased value to the European economy, higher growth and more job opportunities.FP7 proposes actions to increase the participation of SMEs in research and offers them measures that will facilitate their access to research results. Other advantages for SMEs taking part in FP7 will include higher funding rates, a wider choice of funding schemes, the acquisition of new knowledge and increased potential for new products and services.What's the benefit for researchers:Under FP7, SMEs can strengthen their overall position through networking and relationship building with international partners, access to research centres of excellence, and development of research and innovation.Actions will be encouraged across the entire field of science and technology, utilising a bottomup approach. Two dedicated measures will be implemented:(i) Research for SMEs: to support small groups of innovative SMEs in solving common or complementary technological problems.(ii) Research for SME associations: to support SME associations and SME groupings in developing solutions to problems common to large numbers of SMEs in specific sectors.These two measures primarily address the large community of SMEs with a capacity to innovate but with limited research capabilities. To increase the participation of and benefit for SMEs, the outsourcing character of the measures will be strengthened.What's the benefit for industry and SMEs:Throughout FP7, SMEs will actively be encouraged to participate in all research actions, especially those under the Themes of the Cooperation programme. The involvement of SMEs in Joint Technology Initiatives (JTIs) will be encouraged wherever such activity is considered appropriate.A key feature of FP7 is the proposed simplification of rules and procedures. Envisaged measures will cover the entire funding cycle, including the various elements of funding schemes, administrative and financial rules, procedures, readability and user-friendliness of documents.The proposed rules for Participation in FP7 specify a funding rate of 75% for research and development activities of SMEs, rather than the 50% currently applicable in FP6. This should make it more attractive for SMEs to participate in the Framework Programme by lowering their financial burden. Furthermore, the current principle of 'collective financial responsibility' is replaced in the proposal of FP7 with a guarantee fund, which would cover the financial risks of defaulting project participants.