Attracting European funds - Key elements, steps and “traps”
 |
Noiembrie 2011 |
 |
BRD - GROUPE SOCIÉTÉ GÉNÉRALE |
Adresa
Bulevardul Ion Mihalache, Nr. 1-7
Bucureşti, Sector 1
Telefon
+40-21-301.61.00
Fax
+40-21-301.66.36
Website
www.brd.ro
The results in terms of absorption of EU funds are below expectations, but one can consider that in 2012 the situation will improve. BRD - Groupe Société Générale sees the EU Funds as a great opportunity for existing or new business owners, especially in current economic conditions. Moreover, since the beginning of this year, positive signals have been received from clients, who are more and more interested in using the available European resources, fully conscious that the process requires bothknowledge and patience. A measure that was implemented, at the initiative of the banking system, with positive effects during 2011 is the requested committedletter of comfort at the moment of submitting of the financing Application to the Managing Authority. By this document, the bank certifies the existence of sources of funding needed by the beneficiary in order to implement the project in good condition, hence lowering the risk of lack of financing resources for projects’ implementation.
Main issues to be solved for a better absorption rate
There are several main factors that contributed to the current situation: this is the first exercise of accessing European funds at the national level (except SAPARD during pre-accession period), there are different rules applied by the management authorities, the analysis/selection of the eligible projects is often a very slow process, the eligibility criteria do not always match the bank’s specific requests, some of the consulting companies are interested mainly in the approval of the project and notfor the implementation of the respective project, and last but not least, the economic and financial crisis halted/delayed some of the private initiative.
Some of the key aspects that could have a positive efect on the absortion rate are related to: (i) increase tranparency of the entire process; (ii) the decrease of bureaucracy; (iii) improved financial motivation of the staff involved in the management/administration of EU Funds; (iv) better coordination between national and European legislation.
European funding programs available to the Romanian companies and main categories of beneficiaries
During the European Union programming period 2007-2013, Romania administrates several programmes with EU funds component, related to the two major European Policies Agriculture and Cohesion.
Common Agriculture and Rural Development Policy:
- National Rural Development Programme (PNDR) which refers to investments in agricultural holdings, utilities, equipment and machines
- Fishery Operational Program (POP)
Cohesion Policy
- Sectoral Operational Programme Environment (POS Mediu)
- Sectoral Operational Programme Transport (POS Transport)
- Sectoral Operational Programme Increase of economic competitiveness (POS CCE) managed by the Ministry of Economy, Trade and the Business Environment, which supports investments in the increase of production capacity, research and development, energy & energy efficiency & renewables
- Regional Operational Program (POR) managed by The Ministry of Regional Development and Tourism, which sustains the regional developmentof our country`s areas
- Sectoral Operational Programme Human Resources Development (POS DRU) managed by the Ministry of Labor, Family and Social Protection and sustains the development of the human capital and the increase of employee competitiveness
- Operational Programme Building Administrative Capacity
The beneficiaries of these programs are: central and local public authorities, small and medium-sized enterprises, large enterprises and NGOs.
.................................................................................
BRD - a strong involvement in the financing of projects made with European Funds
In terms of BRD - Groupe Société Générale financing, during the first nine months of 2011 the volume of loans increased by 40% as compared to full year 2010. The bank’s dedicated offer EuroBRD includes: advance payment guarantee, bridge loan (to cover the gap between the actual disbursements and the settlement with the EU Funds), investment facility (to cover their own source, up to 100% of its value), credit for non-eligible expenses (up to 75% of their value), additional credit line for current needs generated by the new investment. Regarding the conditions for obtaining financing, they are complementary to those mentioned by the ManagingAuthority Guidelines for Applicants and the analysis is related to the economic and financial situation of the clients. The cost of financing is related both to economic and financial performance of the beneficiary and to the complexity of the project presented.
Also, since 2011 BRD - Groupe Société Générale has intensified its presence on the segment of projects with EU funds financing. In this regard, the bank’s specialized EU funding Experts (EuroBRD Experts) covering our network at a national level, are able to offer advice and support to existing clients and prospects. More specifically, our EuroBRD Experts join the clients and the project consultants since the investment idea, to ensure the project eligibility from both perspectives (Bank/Management Authority). In our experience, a long term, stable, partnership between the client, the project consultant and the bank expert is essential in drafting and implementing a successful project.
.................................................................................
Romania’s best chances to attract grants in the future. Key elements, steps and “traps”
The most dynamic sector so far, with good prospects in the future is the private one (SMEs, large companies), but we should not neglect the fact that the local public authorities and NGOs are making efforts to accelerate the implementation of their projects.
The beneficiary should take into consideration involving the bank since the project definition phase, in order to correctly identify the need for funding. Also, the information in the “application form” for EU funds should include the necessary data for the bank’s review and approval of financing facilities and the cash-flow predictions should include different scenarios regarding the collection of the EU grant (pessimistic/optimistic). In addition, the beneficiary should be familiar with the rules and procedures for implementing and monitoring the postimplementation of the project. The entrepreneur should also carefully choose the project consultant and ensure that he is experienced not only in writing but also in implementing such projects. An entrepreneur should start by establishing the company’s development direction and investment objectives and after that to identify the European programme under which the project may be eligible for European grants (individually or by discussing with one of the bank’s EuroBRD experts). The eligibility criteria apply specifically to each and every operational program/ priority axis/key area of intervention/measure.
The next step is to evaluate the actions and resources needed for the approval and implementation of the project. During this period, the company should hire a consultant to prepare the application for financing with EU funds and should identify a bank in order to discuss his financing needs (including the letter of comfort). In choosing a consultant, the investor’s decision should be based on the consultancy company’s proved experience on the specific financing programme.Once the project application is ready, it must be submitted to the Management Authority, which reviews and approves the project in terms of eligibility for the EU Funds. In case the project is declared eligible, the company signs the contract with the Managing Authority, accesses the bank financing, implements the project and receives the EU Grants. After the implementation, the project becomes operational and the company repays its medium and long term financing (if this is the case).
