Financial instruments: loans and guarantees combined with coaching/export advisory service for SMEs create innovative, proven model of SMEs internationalisation
The aim of this practice was to reduce the risk of financing innovative SMEs and to facilitate access to finance for innovative SMEs. Coaching is an interactive process that helps individuals or organizations to accelerate their growth and improve their performance. Coaching was a tool that minimized the risk of financing business ventures and could get access to international markets.
The aim was to build the JOSEFIN service model based on combining funding with coaching for innovative SMEs, then implementing.
JOSEFIN Project gave us the innovation service model based on the soft tools combined with a financial instruments. JOSEFIN Partners could match the existing financing in their regions/countries with coaching. In Wielkopolska partnership between Promotion and Development Fund of Wielkopolskie Voivodeship (FRIPWW) and Wielkopolska Agency for Enterprise Development Ltd (WARP) was established. FRIPWW was responsible for coaching and guarantee of WARP’s loans and guarantee of credits from banks.
6 Steps of implementation of this model:
1. Promotion and survey
2. Selection of SMEs
3. Call for and selection of coaches
4. Signing agreements
5. Coaching sessions
6. Financial aspects – FRIPWW’s export advisory with guarantee
Stakeholders: JOSEFIN partners, state institutions, entrepreneurship agencies, regional loan and guarantee funds, commercial banks and regional self-governments, technology parks.
Beneficiaries: Innovative SMEs in region.
FR: EIF, own resources or JEREMIE product (UE-ERDF), existing financing in region.
HR: 24 partners from the BSR; In Wielkopolska region by 3: Marshal Office; WARP Ltd.; FRIPWW. In every team there was: (1-3) responsible for accounting; (1-3) for substantive task; and managing leader.
Evidence of success
FRIPWW conducted coaching among 5 companies covering over 70 hours. The Fund provided financial guarantees by financing a producer group (20 companies) with a total amount of PLN 1,960,000.00. Thanks to JOSEFIN agreement signed between FRIPWW and WARP, WARP has provided loans guaranted by FRIPWW, to 99 companies, since 20th feb. 2012, until now.
JOSEFIN's application of EIF instruments was not feasible because the JEREMIE initiative was ongoing. Because of inhibition of the double financing from public funds the implementation of financial instruments required regional authorities in Poland involvement.
Potential for learning or transfer
The structure allows public institutions to share risk with e.g. European Investment Fund therefore it reduces the requirements for guarantees, thus encouraging commercial banks or Loan Funds to finance more innov. projects and/or SMEs with insuff. or no addit. collateral. Described repayable financial instrument model is alternative product for subsidy. Together with other stakeholders, we create regional innov. eco-system. How to do it?
1. Check potential business ecosystems
2. Mutual information-transfer of knowledge, information-sharing
3. Implementing GP from another regions
4. Opening the programmes for outside partners
5. Joint actions in specific priority areas
6. Forming strategy platforms
7. Joint strategies (inter-reg., transnational, macro-reg.)
Success factors: monitoring needs of innov. SMEs, collaboration different actors and maintaining relationships, good project team, using innovative tools, using the EU funds, to be active participant of bus. eco-system