""Implementing JEREMIE in Greece: objective Implementing JEREMIE in Greece: objective andand products for SMEs, perspectives" products for SMEs, perspectives"

Panagiotis DrossosPanagiotis Drossos Secretary General of Investments & DevelopmentSecretary General of Investments & Development

October 2008October 2008

The economic environment in The economic environment in GreeceGreece

with the aim to achievingwith the aim to achieving

Real Real convergenceconvergence

Economic policy of gradual adaptation

Stable macroeconomic environment

Strategic objectives:Strategic objectives:

Innovation, digital convergence and R&DInnovation, digital convergence and R&D Investments in human capitalInvestments in human capital

Self-knowledge…Self-knowledge… Confidence…Confidence… Ambition…Ambition…

The strategic approach of the NSRF 2007-2013 The strategic approach of the NSRF 2007-2013 with emphasis onwith emphasis onInnovation and EntrepreneurshipInnovation and Entrepreneurship

Gap analysis & Market FailureGap analysis & Market Failure

Approximately one third of the Greek enterprises (more than Approximately one third of the Greek enterprises (more than

300,000) 300,000) do not have accessdo not have access to credit.to credit.

High lending costs and level of collateralHigh lending costs and level of collateral are perceived to are perceived to discourage SMEs from resorting to the financial system. discourage SMEs from resorting to the financial system.

High risk and lack of financial informationHigh risk and lack of financial information are perceived to are perceived to discourage the banks from granting loans to SMEs, especially discourage the banks from granting loans to SMEs, especially start-ups. start-ups.

Only 8,000 new enterprisesOnly 8,000 new enterprises resort to the financial system on an resort to the financial system on an annual basis. 40,000-50,000 new enterprises are established annual basis. 40,000-50,000 new enterprises are established every year. every year.

Enterprises without collateral, Enterprises without collateral, “new economy”“new economy” enterprises, women enterprises, women and immigrants have difficulty in accessing the banking system. and immigrants have difficulty in accessing the banking system.

The JEREMIE Small & Micro Loans The JEREMIE Small & Micro Loans Financial Product aims at supporting Financial Product aims at supporting individual entrepreneurs, micro and small individual entrepreneurs, micro and small enterprises, in Greece through funding enterprises, in Greece through funding and/or risk covering of micro & small and/or risk covering of micro & small loans loans

Proposed ProductProposed Product

PurposePurpose

The Product aims to The Product aims to

1.1. Facilitate access to Finance Facilitate access to Finance

2.2. Provide improved financial terms and lower collateral Provide improved financial terms and lower collateral requirements to individual entrepreneurs, micro & small requirements to individual entrepreneurs, micro & small enterprises in order to enhance their activity, increase enterprises in order to enhance their activity, increase competitiveness & stimulate developmentcompetitiveness & stimulate development

StructureStructure

The Product will be provided to the targeted enterprises through The Product will be provided to the targeted enterprises through Financial Intermediaries (FIs) that will provide loans to those Financial Intermediaries (FIs) that will provide loans to those enterprises. In particular, the Product will provide either enterprises. In particular, the Product will provide either

ii Funds to the FIs that will be subsequently on-lent to the targeted Funds to the FIs that will be subsequently on-lent to the targeted enterprises enterprises

oror ii Risk coverage on loans that the FIs will provide to the targeted ii Risk coverage on loans that the FIs will provide to the targeted

enterprisesenterprises

The JEREMIE Holding Fund (HF) (acting in the name of the The JEREMIE Holding Fund (HF) (acting in the name of the Hellenic Republic) will enter into contractual agreement (s) with Hellenic Republic) will enter into contractual agreement (s) with the FIs that will assume the responsibility of the origination, due the FIs that will assume the responsibility of the origination, due diligence, documentation, execution, reporting and monitoring diligence, documentation, execution, reporting and monitoring of the operations. The Hellenic Republic will remain Owner of the of the operations. The Hellenic Republic will remain Owner of the funds.funds.

Investment TargetInvestment Target

JEREMIE Small and Micro LoansFinancial Product

Up to EUR 40 m

JEREMIE Small and Micro LoansFinancial Product

Up to EUR 40 m

Sub-Product 2: Support loan financing for

“innovation & entrepreneurship”

Up to EUR 20 m

Sub-Product 2: Support loan financing for

“innovation & entrepreneurship”

Up to EUR 20 m

Sub-Product 1:Support loan financing for

start-ups

Up to EUR 20 m

Sub-Product 1:Support loan financing for

start-ups

Up to EUR 20 m

Another target group could be those entrepreneurs that would like to commercialize a registered patent with demonstrable market potential.

An avenue that might be explored is combining it with an initial grant funding for the patent registration.

Another target group could be those entrepreneurs that would like to commercialize a registered patent with demonstrable market potential.

An avenue that might be explored is combining it with an initial grant funding for the patent registration.

PricingPricing

The price will be calculated with reference The price will be calculated with reference

to the risk covered. to the risk covered. The Product should be priced in a way that The Product should be priced in a way that

facilitates access to finance to eligible SMEs facilitates access to finance to eligible SMEs and/or improves their financing conditions, and/or improves their financing conditions, but also in a way that provides for the but also in a way that provides for the sustainability of the HF (sustainability of the HF (depending on the depending on the level of risk that the Managing Authority is level of risk that the Managing Authority is willing to takewilling to take).).

The proposed Product is expected to:The proposed Product is expected to:

3. Foster competitiveness of the targeted enterprises and increase their efficiency3. Foster competitiveness of the targeted enterprises and increase their efficiency

1. Enhance access to finance and improve financial conditions for SMEs given the Enhance access to finance and improve financial conditions for SMEs given the lower collateral requirementslower collateral requirements

2. Provide higher availability of finance to SMEs2. Provide higher availability of finance to SMEs

4. Encourage innovation and entrepreneurship4. Encourage innovation and entrepreneurship

5. Create new employment opportunities5. Create new employment opportunities

6. Ensure a high leverage effect for public money6. Ensure a high leverage effect for public money

7. Assist a high number of beneficiaries resulting in the high visibility of public support7. Assist a high number of beneficiaries resulting in the high visibility of public support

8. Reduce the risk element for the FIs8. Reduce the risk element for the FIs

9. Multiply the effect and re-utilisation of the 9. Multiply the effect and re-utilisation of the resources (resources (revolving characterrevolving character).).

Value AddedValue Added

The JEREMIE initiative, offers new opportunities for Member The JEREMIE initiative, offers new opportunities for Member States and Regions to invest and re-invest Structural Funds States and Regions to invest and re-invest Structural Funds using a range of financial instruments instead of or in using a range of financial instruments instead of or in combination with grants. combination with grants.

Greece must take the Chance byGreece must take the Chance by Gaining additional value or leverageGaining additional value or leverage Increasing the competiveness and economic development Increasing the competiveness and economic development Encouraging innovation & entrepreneurshipEncouraging innovation & entrepreneurship

Moreover:Moreover: Funds will be used over a longer period, thus benefiting SMEs Funds will be used over a longer period, thus benefiting SMEs

overall by reducing the risk in their investments overall by reducing the risk in their investments

A sustainable toolA sustainable toolto support SME financeto support SME finance

www.espa.grwww.espa.gr

www.mnec.gr www.mnec.gr

www.ggea.grwww.ggea.gr