Approach

Preparation for JEREMIE actions
The EC’s Directorate General for Regional Policy (DG Regio) instructed EIF, as the EU's specialist financial institution for SME finance, to study the situation.

Since 2006, EIF evaluated the gaps between the potential demand for non-grant financial debt and equity instruments in support of SMEs and existing supply capacity of local financial intermediaries, such as banks and venture capital funds to prepare the grounds for the JEREMIE initiative. So far, EIF worked on some 30 demand-supply gap evaluations for Member States and regional authorities that had expressed an interest in the JEREMIE initiative.

Implementation of JEREMIE actions
On the basis of EIF’s evaluations of market gaps, Managing Authorities from Member States and Regions may opt to use their Structural Fund allocations for the funding period 2007 to 2013 to implement SME finance actions through the JEREMIE initiative. This implementation phase of JEREMIE began in 2007 and will run until 2013.   

MemberStatesand Regions opting to participate in JEREMIE financial actions place part of their EU-allocated Structural Funds in a dedicated fund (a JEREMIE holding fund). These monies invested into a JEREMIE holding fund to be used in a range of possible financial instruments for SMEs enabled by and coordinated through the JEREMIE initiative. To participate in the JEREMIE initiative, Member States and Regions must enter into a formal process which is described below.

Organisational structure of JEREMIE actions

Managing Authority
The national or regional authority responsible for managing the Member State or Region’s Structural Funds allocations, known as the Managing Authority, must opt to participate in the JEREMIE initiative.

Holding Fund
The Managing Authority then establishes a Holding Fund for the Structural Fund monies earmarked for utilisation under the JEREMIE initiative and appoints a Fund Manager (e.g. EIF). The Holding Fund acts as a fund-of-funds. The cooperation between the Managing Authority and the Fund Holder is governed by a Funding Agreement which, for example, defines the type of cooperation and the operational modalities of the fund holder in implementing the instruments.

The Holding Fund’s responsibilities include the selection of local financial intermediaries for the different financial instruments through calls for expression of interest and monitoring the use of funds by financial intermediaries and by beneficiary SMEs.

The Holding Fund may be governed by a JEREMIE Investment Board, operating on a national or regional level, which is comprised of representatives of the Managing Authority (or Authorities) and other national and regional bodies involved in SME finance, as considered appropriate by the Managing Authority.

The Holding Fund acts on the basis of an Investment Strategy and Business Plan for the implementation of the JEREMIE funds. Upon the plan’s approval by the JEREMIE Investment Board, the EU Structural Fund allocation will be contributed into the Holding Fund.

Financial intermediaries
With funds available, the Holding Fund opens an open call for expression of interest to identify possible beneficiary financial institutions specialised in SME finance on the basis of the JEREMIE holding fund investment strategy. JEREMIE foresees a wide spectrum of SME financial institutions to become intermediaries such as SME finance operators, venture capital funds, loan funds, technology transfer vehicles, micro finance providers, banks, and guarantee funds.

JEREMIE financial intermediaries may provide SME-focussed financial instruments including guarantees, co-guarantees and counter-guarantees, equity guarantees, (micro) loans, securitisation, venture capital, Business Angel Matching Funds, and investments into Technology Transfer funds.

Small businesses
SMEs are the final beneficiaries and may obtain funding directly from the partner financial institutions.