Programmes encouraging the development of microfinance in the EU

SUMMARY OF:

Decision No 283/2010/EU establishing a European Progress Microfinance Facility for employment and social inclusion

Regulation (EU) No 1296/2013 on an EU Programme for Employment and Social Innovation (‘EaSI’) and amending Decision No 283/2010/EU

WHAT IS THE AIM OF THE DECISION AND THE REGULATION?

Decision No 283/2010/EU establishes a European Progress Microfinance Facility for employment and social inclusion.
Regulation (EU) No 1296/2013 establishes the EU programme for employment and social innovation (EaSI) which aims to:
- deliver sustainable and long-term growth and jobs;
- reduce divergence between EU countries; and
- help to reduce social inequality.
The regulation also amends Decision No 283/2010/EU requiring the balance due to the EU upon the expiry of the facility to be made available for microfinance* and support for social enterprises*.

KEY POINTS

Under the decision, the facility, which had a budget of €100 million over 4 years (2010-2013), was designed to make microfinance more easily accessible to the following target groups:

the unemployed, people at risk of losing their jobs, the non-working population, people facing the threat of social exclusion and vulnerable people who wish to create or expand their own microenterprise*;
microenterprises, especially those employing the people listed under the previous point.

For the 2014-2020 period, under Regulation (EU) No 1296/2013, this initiative was included in the microfinance and social entrepreneurship strand of the EU EaSI programme that has taken over from the Progress Microfinance instrument. Regulation (EU, EURATOM) 2018/1046 on the financial rules governing the EU budget updated the indicative percentage applicable on average over the whole period of the programme to the 3 axes*. As a result, at least 18% of the total budget should be used for microfinance and social entrepreneurship.

Not only does EaSI allow target populations and enterprises to access microfinance more easily, but it also aims to:

build up the institutional capacity of microcredit providers;
facilitate access to financing for social enterprises with a turnover or annual balance sheet of no more than €30 million, by providing them with equity, quasi-equity, lending instruments and grants up to a limit of €500,000.

Provided that they grant microfinance to people and microenterprises or financing to social enterprises, the microfinance and social entrepreneurship strand can be accessed by public and private bodies established in the EU countries, Iceland, Albania, Montenegro, North Macedonia, Serbia and Turkey. EU support is mainly through the financial instruments provided for in the EU’s financial regulation (Regulation (EU) 2018/1046) which, among other things, amends Regulation (EU) No 1296/2013 and updates and simplifies the rules applicable to the EU’s general budget.

FROM WHEN DO THE DECISION AND REGULATION APPLY?

The decision has applied since 8 April 2010.
The regulation has applied since 21 December 2013.

BACKGROUND

For more information, see:

EU Programme for Employment and Social Innovation (European Commission)
EU Programme for Employment and Social Innovation (EaSI) (European Commission)
EU microfinance support (European Commission).

KEY TERMS

Microfinance: loans of less than €25,000 issued mainly to small businesses and social entrepreneurs.

Social enterprise: an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders.

Microenterprise: a business with fewer than 10 employees and an annual turnover (the amount of money taken in a particular period) or balance sheet (a statement of a company’s assets and liabilities) below €2 million.

Axes: the EaSI programme comprises 3 axes. They support:

the modernisation of employment and social policies (the Progress axis);
job mobility with (the EURES axis);
access to micro-finance and social entrepreneurship (the Microfinance and social entrepreneurship axis).

MAIN DOCUMENTS

Decision No 283/2010/EU of the European Parliament and of the Council of 25 March 2010 establishing a European Progress Microfinance Facility for employment and social inclusion (OJ L 87, 7.4.2010, pp. 1-5)

Successive amendments to Decision No 283/2010/EU have been incorporated into the original text. This consolidated version is of documentary value only.

Regulation (EU) No 1296/2013 of the European Parliament and of the Council of 11 December 2013 on a European Union Programme for Employment and Social Innovation (‘EaSI’) and amending Decision No 283/2010/EU establishing a European Progress Microfinance Facility for employment and social inclusion (OJ L 347, 20.12.2013, pp. 238-252)

See consolidated version.