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Financing

According to a recent European Commission survey in 42 countries (Member States + EU competitors) measures to support entrepreneurship fall into the ten broad categories (dimensions) outlined in the Table below.

Table 1. The 10 dimensions of business support services for prospective entrepreneurs and start-ups.

 TitleDescription
1VisibilityAwareness-raising, communication and promotion campaigns to encourage entrepreneurship, including among selected target groups (young, women). It is primarily aimed at mobilizing stakeholders and cultivating interest.
2. Entrepreneurship/ Business TrainingProvide entrepreneurial and business training to prospective entrepreneurs through specialized courses in or outside formal education
3. Legal and Regulatory AdviceAdvice on legal and regulatory requirements for the establishment and operation – development of the business, including advice on specific areas or activities.
4. Individual Business SupportAdvice and other forms of support aimed at preparing the entrepreneur and developing the skills and competencies needed to effectively manage a business (providing services provided by incubators or accelerators).
5.MentoringProviding systematic access to consultants and coaches
6.NetworkingEstablish networks to support young entrepreneurs, in particular young entrepreneurs and women entrepreneurs, and / or to facilitate their access to existing business networks.
7. Facilities ProvisionProviding (co) workplaces and integrated workspace support services, for example incubators and accelerators
8.Access to FinanceAccess either through conventional sources or through alternative sources such as seed ventures, business angels, crowdfunding, etc.
9.Digital Strategy & EducationProviding IT training, supporting the development of digital business strategies and platforms, supporting the integration of new business models.
10. Strategic measuresMeasures that encourage the creation of new businesses or the development of new businesses through broad measures, such as urban development strategies or public procurement initiatives.

The following types of financing can be distinguished:

Grants

Grant schemes provide access to financing that is not repayable by the beneficiary company or entrepreneur. Some services like e.g. “Innovation Coupons”, “Digital Toolboxes” provide relatively small grants (some hundreds or thousands of euros) for specific actions, but the majority of ERDF-assisted schemes have a larger scope at the margin of the exemption regulation and for various types.

Loans and microcredit

Loan disposal is a second common type of access to financial services. These services provide access to financing in the form of repayable loans, including through microcredit. In Greece, as will be discussed in more detail below, the practice of microcredit has only been developed on a pilot basis, depriving it of the ability to use a tool that in many European countries has been instrumental in supporting start-ups.

Loan Guarantees

An alternative to lending is to facilitate a loan from a commercial bank by offering a loan guarantee, which reduces the risk for the financial institution.

Equity Capitals and third party investments

Equity and other investments are a type of service that promotes access to finance. Equity and other investments are generally a less common form of financing and tend to be offered in combination with loans and guarantees, in particular to support businesses that are expected to expand.

Crowdfunding

Crowdfunding is the practice of financing a project or business by raising small money from a large number of people, usually through the Internet and social networks.

Micro-credit

At European level, microcredits play an essential role in financing start-ups. A key feature of this practice is that it is developed outside the banking system, thereby bypassing the need for real guarantees such as mortgages, financial guarantees, depositing short-term payment entitlements, which de facto start-ups or start-ups do not have. Microcredit systems mainly for the provision of microcredit have been developed successfully (both as a region and as a range of services) in Greece at regional level (Thessaly, Central Macedonia). Full implementation requires the establishment of a specific framework. This was promoted in early 2019, when a draft law was consulted. According to this (and after the European Central Bank’s opinion on the non-participation of banks in the system) Microfinance may be offered by independent bodies such as chambers or public limited companies.

According to the Ministry of Economy and Development’s legislative initiative, the microfinance institutions to be set up should provide the following forms of microfinance:

In addition to providing funding under the draft law, microfinance institutions are required to provide business training and guidance counseling on all business microfinance to their beneficiaries.

Advisory services include in particular:

This way of supporting businesses has the advantage that, as loans are repaid, they can be used to support other businesses so that the initial public investment can become renewable capital. Although these types are a separate type of financing, in practice the services they provide can cover very different startup activities.

Access to financial resources for start-ups

The “Start-up Entrepreneurship” action of EPANEK 2014-2020.

Only one cycle (2016) has been implemented. The Action concerned the establishment of new small and micro-enterprises by unemployed and non-employed workers. The aim was to create very small and small, viable businesses with an emphasis on innovative business plans and to boost employment by creating sustainable new jobs.

The grant amount was between 15,000€  and 60,000€  and the eligible expenditure were:

The EPANEK 2014-2020 Action “Enhancing the Self-Employment of Higher Education Graduates (A and B Cycle)”.

The Action was implemented in two cycles (2016 and 2018) with the aim of supporting higher education graduates, unemployed and self-employed, to start / support their professional activity related to their specialty and the organization of an independent professional space. The aim of the program is to reduce the unemployment of higher education graduates through self-employment, by pursuing a profession related to their specialty and creating new jobs.

The maximum amount of aid was 25,000€.

Modernization of technological equipment

The Modernization of Technological Equipment is included as an autonomous financing operation of Development Law 4399/2016. Under the Law, three Proclamations of the status of “Mechanical Equipment Aid” have been issued.

The purpose of the scheme is to create a framework of restricted aid with very simplified procedures. Under the scheme, they are exempt from tax exemptions, machinery and equipment costs used within the unit, provided that they relate to the initial investment.

The total budget of this scheme ending at the end of February 2020 amounts to 150,000,000 EUR and relates to the type of tax exemption aid.

All the investment projects that are eligible under Law 4399/16 may be eligible for tax exemption and with the amount of aid provided by the Regional Aid Charter, except as provided in paragraph 4a of Article 7 of Law 4399/16 (Sector of production, distribution and energy infrastructure).

The aid shall cover the following expenditure: