EU to Create Microfinance Facility for Unemployed

The European Commission has announced that it will create a EUR100 million (US$141.1 million) microfinance facility to provide credit to small businesses and encourage people who have lost jobs to start such enterprises. The initial budget of the loan facility could leverage more than EUR500 million (US$700 million) in joint ventures with other financial institutions such as the European Investment Bank.

European small businesses and consumers have been hard hit by the ongoing recession, which has made access to credit difficult and pushed unemployment rates to record levels as more workers are laid-off. "The economic crisis will lead to 3.5 million job losses in the EU this year. In the current recession, we want to offer a new start to the unemployed through easier access to credit to set up or develop new businesses," EU Employment and Social Affairs Commissioner Vladimir Spidla said in the statement.

The disadvantaged, including the young people who want to start or develop small businesses will benefit from guarantees, assistance, mentoring and training in preparing business plans. Loans would be tailored for microenterprises employing fewer than 10 people, which would be eligible for loans up to EUR25,000 (US$35,000) each. The plan could offer around 45,000 loans over a period of up to eight years. The proposal is expected to become operational by next year after it has been discussed and adopted by the EU ministers, the executive and European lawmakers.

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