# Council Decision of 6 October 2006 on Community strategic guidelines on cohesion (2006/702/EC), Division 1.2.4: Improve access to finance

Extent: E+W+S+N.I.

Another key ingredient for the promotion of knowledge and innovation is to facilitate access to finance. For the purpose of fostering growth and job creation, it must be sufficiently rewarding for entrepreneurs and enterprises to invest in the development and production of goods and services rather than to focus efforts, for example, on rent-seeking activities.
Access to finance in this context is often difficult, thus creating an obstacle to growth and job-creation. Improving access to capital both for RTD activities and for start-ups is important. Risk capital markets related to innovation activities need to be developed in conjunction with a better regulatory environment that makes entrepreneurship easier.
These programmes could be undertaken in close cooperation with the European Investment Fund (EIF) under the JEREMIE initiative in order to develop financial resources in areas where entrepreneurship is hampered by market failures owing to the high risks associated with RTD activities. Due account must also be taken of the impact of government support for business creation, in order to avoid the crowding-out of private investment and measures that are damaging to competition. Coordination between funds should also be enhanced.
Private equity and venture capital and rotating funds for innovative start-ups should play the essential role as an engine for entrepreneurship, innovation and job creation; public sector institutions are not always best suited to risk-taking. The priority should be to create or expand specialised providers of risk capital and bank guarantees, where there is market failure. Typically, they will be more effective if they provide an integrated package of support, starting with training before the business start-up or expansion.
Based on these principles, the guidelines for action are:
Supporting non-grant instruments such as loans, secured debt financing for subordinate debt, convertible instruments (mezzanine debt) and risk capital (e.g. seed capital and venture capital). Grants should be used to build and maintain infrastructures that facilitate access to finance (e.g. technology transfer offices, incubators, ‘business angels’ networks, investment readiness programmes). Guarantee and mutual guarantee mechanisms could also be supported to facilitate access to micro-credit by SMEs. The EIB and the EIF could provide valuable input in this regard.
Developing an integrated approach that simultaneously supports innovation, its transfer into new commercial activity and the availability of risk capital.
Outreaching to certain specific groups, for example, young or female entrepreneurs or disadvantaged groups.
It is particularly important to work closely with the EIF in view of the expertise it has developed over a number of years, in order to give SMEs the required support, while developing the European risk capital market at the same time. This could involve participation in the JEREMIE initiative.

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Source: https://www.legislation.gov.uk/eudn/2006/702/annex/division/1/division/1.2/division/1.2.4 (the official version)
Page: https://openlegislation.uk/eu-decision-2006-702/annex/division-1/division-1.2/division-1.2.4
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.