PowerPointPrsentation

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Subsidies for SMEs in Europe
Mag. (FH) Sylvia MeixnerRaiffeisenlandesbank
NÖ-Wien AGGrants Subsidies ConsultingVienna,
28th of June 2006
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Subsidies for SMEs in Europe

• Agenda
• Grants Subsidies in Theory
• Introduction to the topic Subsidies in the EU
• Subsidies on the international level for SMEs
• Examples of Best Practice
• Example of Best Practice from Austria
• Example of Best Practice from the Czech Republic
• The successful way to Subsidies
• Suitable preparation
• Whom to contact?

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Grants Subsidies in Theory

• ! Subsidies are forbidden within the European
  Union !
• But there are some exceptions
• Research and Development
• Education
• Cultural
• Energy
• Environment
• Transeuropean Networks
• New Media, Information Technology
• Assisted Areas
• Small and Medium-sized Enterprises

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Grants Subsidies in Theory

• Further information about the other emphasis
• Research and Development ? 6th 7th RD
  Framework
• Programme www.cordis.lu
• Education gt SOKRATES, LEONARDO
• http//ec.europa.eu/dgs/education_culture/index
  _de.html
• Cultural ? KULTUR 2000
• http//ec.europa.eu/culture/eac/index_en.html
• Energy ? SAVE, ALTENER http//www.energyagency.a
  t
• Environment ? LIFE
• http//ec.europa.eu/environment/life/home.htm
• Transeuropean Networks ? TEN
• http//ec.europa.eu/ten/index_en.html
• New Media, Information Technology ? MEDIA Plus
• http//ec.europa.eu/comm/avpolicy/media/index_e
  n.html

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Grants Subsidies in Theory

• Small and Medium-sized Enterprises
• Definition of SMEs
• Employees max. 250 and
• Annual Turnover max. EUR 50 mio. or
• Total Assets max. EUR 43 mio.
• Shareholders and Investments
• 25 - 50 aliquot inclusion
• 50 - 100 inclusion with total amounts

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Grants Subsidies in Theory

• Small and Medium-sized Enterprises
• Eligible Projects of SMEs
• Modernization
• Start-Ups
• Enlargement
• within the own country
• abroad (start-up, Joint Venture, takeover,..)
• NOT replacement investments
• NOT purchase of real estate

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Grants Subsidies in Theory

• Subsidies on the international level
• European Investmentbank (EIB)
• Lower-cost Refinancing of eligible projects via
  Financial
• Intermediaries (f.ex. Raiffeisenlandesbank
  NÖ-Wien)
• Information www.eib.org or Financial
  Intermediaries
• European Investment Fund (EIF)
• Guarantees for Financing Facilities for SMEs,
  Risk Capital
• Information www.eif.europa.eu or Financial
  Intermediaries
• European Bank for Reconstruction Development
  (EBRD)
• Project financing for foreign direct investments
  from Central
• Europe to Central Asia
• Information www.ebrd.com or Financial
  Intermediaries

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Examples of Best Practice

• Example of Best Practice from Austria I
• German Company
• establishes a subsidiary in Austria (Lower
  Austria)
• offers intelligent services
• Total Costs of Investment EUR 1 mio.
• Working Capital Credit EUR 0,25 mio.
• ? They were searching for a suitable financing
  structure ( if possible including subsidies)

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Examples of Best Practice

• Example of Best Practice from Austria II
• Some important considerations within the
  structuring process
• Client wishes that the project will finance
  itself
• Project Finance cost-intensive difficult
  to finance
• Agreement between client bank
• own resources to be able to state an Equity
  Ratio of 8
• (EUR 0,25 mio.)
• Promoters assume liability for another EUR 0,4
  mio.

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Examples of Best Practice

• Example of Best Practice from Austria III
• Some important considerations within the
  structuring process
• still an amount of EUR 1 mio. to finance
• still a Project Finance Facility
• almost no physical securities available
• But our aim has been to turn the project from
  theory into reality
• only possible with other suitable securities
• that was the point of thinking about Subsidies

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Examples of Best Practice

• Example of Best Practice from Austria IV
• Choice of Subsidies for this project
• Guarantee granted by Austria Wirtschaftsservice
  GmbH
• and
• Guarantee granted by NÖBEG (for Lower Austria)
• they guarantee for up to 80 of a financing
  facility
• but risks should be shared equally (promoter,
  bank,
• authority)
• Local Authorities granted guarantees for an
  amount of
• EUR 0,5 mio.

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Examples of Best Practice

• Example of Best Practice from Austria V
• Something about the flexibility of these subsidy
  programmes
• Own resources of EUR 0,25 mio.
• Financing facility of EUR 1 mio.
• partly guaranteed by the promoters
• partly guaranteed by Local Authorities
• for some other parts no securities at all
• Grace period also possible for subsidies credit
  facilities
• Maturity of financing facility subsidies
  matches with
• planned profits
• Interest rates are caped as subsidies are
  involved

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Examples of Best Practice

• Example of Best Practice from Austria VI
• Actually the funding of the project is structured
  satisfactorily
• BUT some more subsidies are available
• up to the maximum allowable extend
• Subvention of EUR 37.500,- by Austria
  Wirtschaftsservice
• ( Federal Authority)
• Refinancing of the project via EIB gt lower
  interest rates
• are possible
• Subvention to interest rates by the Authority of
  Lower
• Austria (NÖ Wirtschafts- und
• Strukturverbesserungsfonds) subvention of 2
  p.a. for
• an amount of EUR 0,3 mio.

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Examples of Best Practice

• Example of Best Practice from the Czech Republic
  I
• Austrian Enterprise (SME)
• establishes a subsidiary in Czech Republic
• Total Costs of Investment EUR 700.000,-
• They need a financing facility in the amount of
• EUR 600.000,-
• Difficulties at financing this project
• Failure of project would lead to the failure of
• company in Austria

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Examples of Best Practice

• Example of Best Practice from the Czech Republic
  II
• Nonetheless a financing of this project is
  possible
• Bank is financing the corporate in Austria
• Inclusive a guarantee granted by Austria
• Wirtschaftsservice (programme
  internationalization)
• They grant a security in the amount of EUR
  480.000,-
• (80 of financing facility)
• Corporate is able to transfer the funds to the
  subsidiary
• in the Czech Republic (shareholders loan)

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Examples of Best Practice

• Example of Best Practice from the Czech Republic
  III
• AWS-Programme Internationalization offers more
• advantages
• AWS also offers an insurance against the risk
  of failure
• in the Czech Republic (project guarantee)
• If project/subsidiary abroad fails, AWS will pay
  up to 50
• of the total investment costs
• Interest rates are caped either
• AWS-Guarantees grant accession to the funds of
  OeKB
• Österreichische Kontrollbank (OeKB) Export
  Credit
• Agency in Austria

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Examples of Best Practice

• Example of Best Practice from the Czech Republic
  IV
• The financing structure pictured

Subsidiary
CZ Rep.
Shareholders loan EUR 600
Own resources EUR 100
Austrian Corporate
Project Guarantee EUR 350
Austria
Financing Facility EUR 600
Financing Guarantee EUR 480
Bank
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Examples of Best Practice

• Example of Best Practice from the Czech Republic
  V
• More subsidies were available for the project
• for establishing a subsidiary in Czech Republic
• in region with an unemployment rate 25-50
  above
• average
• they create 20 new jobs within the next 2
  years
• ? Subsidies, advised by Raiffeisen, granted by
• CzechInvest (www.czechinvest.org)
• Partly Tax Exemption for up to 10 years
• Subvention of CZK 2 mio. for the creation of
  20 jobs

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Examples of Best Practice

• Local Authorities in other European Countries
• Belgium The S.R.I.B group www.srib.be
• Croatia Croatian Bank for Reconstruction
  Development
• (HBOR) www.hbor.hr
• Germany Ministry for Economy and Export
  Control
• www.bafa.de
• Hungary Hungarian Investment and Trade
  Development Agency
• (ITDH) www. itd.hu
• Poland Ministry of Economy, Labour and social
  Policy,
• Department of Structural Policy Coordination
• www.mgpips.gov.pl
• Romania Chamber of Commerce and Industry of
  Romania and
• Bucharest www.ccir.ro www.mimmc.ro
• Slovenia Ministry of the Economy www.gov.si/mg/

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The successful way to Subsidies

• The successful way to Subsidies
• Insertion of Application before the start of the
• project/investment !!
• Directives / Guide Lines will change by the
• 01.01.2007 !!

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The successful way to Subsidies

• The successful way to Subsidies
• Suitable Preparation
• Project Description
• Specification of Total Investment Costs
• Plan Figures
• Description of the Enterprise
• Description of the Target Market
• SWOT-Analysis
• Are there any economic effects (job creation)?
• NO NEED to search for possibilities of Subsidies!

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The successful way to Subsidies

• The successful way to Subsidies
• Whom to contact
• Consultants in your bank
• Local Authorities
• Management Consultants specialized on Subsidies
• (please ask for their references)
• Especially in Austria we advise
• Austria Business Agency
• Eco Plus Centropa Business Consulting for
  Lower
• Austria (www.centropa.co.at)

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Many thanks for your attention! For further
information please contact us
Grants Subsidies Consulting at
Raiffeisenlandesbank NÖ-Wien AG Mag. (FH) Sylvia
Meixner (43.51700. 92548, sylvia.meixner_at_raiffeis
enbank.at) Christian Mock (43.51700. 92267,
christian.mock_at_raiffeisenbank.at) Mag. Bernhard
Rak (43.51700. 92676, bernhard.rak_at_raiffeisenbank
.at)