Sustainable Competitiveness, Growth, and Know-how for Enterprises

the eFinland Weblog

Helsinki, 6 March, 2006 — In 2005, EUR 190 million was granted for Finnish enterprise development projects, of which EUR 75 million came from EU funds. A total of 5,000 projects received funding. The bulk of the funding was granted by the national Employment and Economic Development Centres, T&E Centres.

The regional T&E Centres granted financing totalling EUR 129 million, for 2,900 projects. Of this, EUR 49 million came from the European Regional Development Fund (ERDF). The bulk of the funding was granted for corporate investments and for the development of business operations and the operating environment. Nearly half of the amount was granted for projects in the most poorly developed areas of Northern and Eastern Finland.

The funding provided by the T&E Centres for the promotion of know-how at small and medium sized enterprises (SMEs) totalled EUR 25 million, of which aid from the European Social Fund (ESF) accounted for EUR 11 million.

The National Technology Agency (Tekes) and the state financing company Finnvera plc also played their part in the EU funding programmes

Tekes grants research and development aid in the EU programmes. Finnvera plc grants loans and loan guarantees for businesses. In 2005, Tekes granted financing worth EUR 21 million in the EU programmes, and Finnvera plc loans and loan guarantees were worth EUR 15 million.

The Scope and Quality of Projects Were Increased Through Funding

The qualifying criterion for business funding provided by the T&E Centres is that public funding be deemed a significant factor for the viability of the project. The funding granted in 2005 was considered to have a significant impact on the quality and scope of many qualifying projects. The proportion of these projects among all projects financed was almost two thirds. Moreover, approximately one fifth of the projects were considered totally unviable without public resources.

The development of products, services and manufacturing processes was emphasised in the investment projects

The bulk of the investment financing granted was for the development of products, services and manufacturing processes at the qualifying companies. Two thirds of the development funding was aimed at improving business know-how and preparedness for international business operations on the part of SMEs. Of the funding aimed at improving the operating environment, the bulk was used for developing services specifically for the needs of SMEs. Funds were granted for such purposes as developing business incubation services and advisory services for start-up businesses.

Emphasis Was on Supporting Projects Undertaken by Small Enterprises

The business funding granted by the T&E Centres is predominantly for developing and supporting the growth of small enterprises employing fewer than 50 people. The percentage of the total funding going to small enterprises was more than two thirds, and this funding accounted for over 90% of the total number of projects financed. Additionally, supporting start-ups is a core area of focus for the funding. Of all the investment and development projects financed, these accounted for around one third.

The bulk of the financing was granted to manufacturers of metal products. From the 2004 level, this sector’s share of the funding rose by five per cent, coming to nearly 22% of total financing. The funding for machine manufacture, electronics and foodstuffs also increased from the previous year, accounting for almost 20% of the total funding. However, financing granted for the timber products sector decreased, coming to 12% of the 2005 funding. The service sector received fractionally under 20% of the funding; its share of all financed projects, nevertheless, increased, coming to just over one third. The majority of the projects of service sector enterprises were projects undertaken by providers of professional business services and tourism services.

The Number of Applications Was Virtually Unchanged

The number of applications for business financing – in a total of EUR 222 million – was nearly 3300. The number remained unchanged from the previous year, but the amount of funding applied for decreased by 13% from 2004’s level. However, the numbers of applications increased somewhat in the areas of the Central Finland, Southeastern Finland and North Karelia T&E Centres. Of the applications, nearly two thirds were for investment financing. Of the applications received, those from business service providers and producers of metal products accounted for the greatest proportion.

Investment was an important use for the business financing granted. The proportion of the overall funding used for financing investment was nearly 80%, a slight increase from the previous year.

Business Know-How and Ownership Changes Were Important Areas for Skills Development

In the projects partially financed by the ESF, there was a particular emphasis on improving the business know-how of SMEs and on promoting generational succession and other ownership changes.

Measures were also channelled to, amongst other areas, the skills-intensive service sectors and SMEs operating in the social and health service sectors. Furthermore, resources were allocated for enabling SMEs to benefit from ICT technology, for hastening the commercialisation of innovations and for lowering the internationalisation threshold for SMEs.

In 2005, over 60% of people taking part in the development projects were from businesses employing under 10 people.

Further information
The EU Structural Fund Programmes, Business Finance
Industrial Counsellor Heikki Vesa, MTI, tel. +358 9 1606 3674
Chief Counsellor Auli Korhonen, MTI, tel. + 358 9 1606 3219

Development Services, European Social Fund
Industrial Counsellor Marjukka Aarnio, MTI, tel. +358 9 1606 3720
Director of Development Sirpa Alitalo, MTI, tel. +358 9 1606 3680

More information
http://www.te-keskus.fi
http://www.tekes.fi
http://www.finnvera.fi