16 October 2013

Preparatory action - Supporting the demand and supply side of the market for social enterprise finance

Deadline for submitting of proposals: 15 November 2013.


The objective of the preparatory action is to identify, develop, promote and disseminate the good practice of national, regional or local governments and of financial intermediaries in assisting young social entrepreneurs at times of high youth unemployment. 

Strand A: Establishment of social finance partnerships
This strand is particularly relevant for actions in countries in which the social finance market is not developed yet. It aims at addressing situations in which no suitable social finance instrument is in place, with a lack of investors prepared to launch or participate in a financial instrument.

Strand B: Establishment of social finance instruments and mechanisms 
This strand is particularly relevant for actions in countries with a relatively low level of development of the social finance market. It aims at addressing situations in which there is no suitable social finance instrument in place and potential investors and intermediaries lack expertise that can guide the drafting of contractual agreements needed for setting up a financial instrument. 

 Strand C: Establishment of collaborative funding models for social enterprises 
This strand is particularly relevant for actions in countries in which different types of actors are already operating in the social finance market, but in isolation. As a result, these different types of social finance providers (foundations, social investors, public authorities, notably ESF managing authorities) apply a broad range of incoherent and unrelated eligibility criteria return expectations, conditions for repayment, requirements for accounting and reporting etc. 

Strand D: Development of investment readiness support for social enterprises 
This strand addresses the insufficient investment-readiness of social enterprises. Even in countries where there is a large pool of capital willing to invest in social enterprises, investments often remain complicated as social enterprises are not "investment ready". This can be explained sometimes by their low interest in repayable financial instruments due to an orientation towards the so-called grant economy, but also by a lack of necessary documents such as impact reports or business plans and insufficient experience in making proposals for external financing, or for combining different sources and types of finance (e.g. grants/loans 

For all strands, the focus should be on social ventures that aim at social impact, are financially sustainable, want to scale up (including through franchise) and, for that purpose, want to raise between EUR 100 000 and EUR 500 000. 

The total budget: EUR 1 million. The EU grant is limited to a maximum co-funding rate of 80% of the total eligible costs.

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