Historic Agreement between EU and Fredericks Foundation

The European Investment Fund (EIF) and Fredericks Foundation have signed a guarantee agreement aimed at supporting more than 1,000 micro-enterprises in the UK under the EU Programme for Employment and Social Innovation (EaSI).

This new guarantee agreement allows Fredericks Foundation to provide a total of GBP 5.5 million (c. EUR 8 million) to over 1,000 micro-entrepreneurs, many of whom face difficulties in accessing credit from traditional banking sources. The EaSI Guarantee scheme was launched in June 2015 and is funded by the European Commission and managed by the European Investment Fund.

EIF Chief Executive, Pier Luigi Gilibert said: “I am delighted to be signing our first microfinance agreement in the UK with Fredericks Foundation. This EaSI guarantee will help to support disadvantaged micro-entrepreneurs, many of which were previously unemployed, to access finance to start-up, and develop their companies. We also expect to sign similar transactions in the coming months.”

Marianne Thyssen, Commissioner for Employment, Social Affairs, Skills and Labour Mobility, said: "The European Commission is firmly committed to helping micro-entrepreneurs in the EU, and giving them the means to succeed as a pathway to fighting social and financial exclusion. Today's agreement will enable over 1,000 micro-enterprises in the UK to receive a loan to help them take root and develop, and thereby creating jobs and stimulating the economy from the foundation up."

Duncan Parker, Fredericks Foundation CEO said: Fredericks Foundation is thrilled to have signed the EaSI guarantee agreement.  EaSI will enable us to continue to be a great choice for philanthropists who believe in sustainable solutions and therefore support many more people in the UK who need finance to start or expand a business. With a loan from Fredericks, people can gain economic independence for themselves and create jobs for others in their communities.

Micro-enterprises wishing to apply for a micro-loan under EaSI can directly contact Fredericks Foundation branches in the UK.  

EIF will not provide direct financial support to enterprises but will implement the facility through local financial intermediaries, such as microfinance, social finance and guarantee institutions, as well as banks active across the EU-28 and additional countries that are participating in the EaSI programme. These intermediaries will deal with interested parties directly to provide support under the EaSI Guarantee.  

About the Programme for Employment and Social Innovation

Under the EU Programme for Employment and Social Innovation (EaSI), the European Commission supports microfinance and social entrepreneurship finance with an overall envelope of EUR 193 million for the period 2014-2020. The aim is to increase access to microfinance, which includes microcredit i.e. loans of up to EUR 25,000, in particular for vulnerable persons and micro-enterprises. In addition, for the first time, the European Commission will also support social enterprises through loans of up to EUR 500,000. The microfinance and social entrepreneurship support will be first implemented through the EaSI Guarantee, which will enable financial intermediaries to reach out to (potential) micro-entrepreneurs that would not have been able to gain finance otherwise due to risk considerations. The European Commission has selected EIF to implement the EaSI Guarantee.

About the European Investment Fund

The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 8.8 billion at the end of 2014. With investments in over 500 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 5.6 billion in over 350 operations at end 2014, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

 

Do I qualify for EaSI support? All loans are eligible for EaSI support except for the following:

(i) Have been involved in bankruptcy, debt relief order or insolvency proceedings in the 5 years prior to date of application

(ii) Not resident and business not operated in the UK

(iii) Has not been declined finance by a bank or other recognized lending institution

(iv) Is currently involved in insolvency proceedings

(v) Business not legal

(vi) Has substantial focus on one or more Restricted Sector activities - see below

(vii) Loan amount exceeds £18,000

 

 RESTRICTED SECTORS

1. Illegal Economic Activities

Any production, trade or other activity, which is illegal under the laws or regulations of the home jurisdiction for such production, trade or activity (‘Illegal Economic Activity”).

 

Human cloning for reproduction purposes is considered an Illegal Economic Activity.

 

2. Tobacco and Distilled Alcoholic Beverages

The production of and trade in tobacco and distilled alcoholic beverages and related products.

 

3. Production of and Trade in Weapons and Ammunition

The financing of the production of and trade in weapons and ammunition of any kind. This

restriction does not apply to the extent such activities are part of or accessory to explicit European

Union policies.

 

4. Casinos

Casinos and equivalent enterprises.

 

5. IT Sector Restrictions

Research, development or technical applications relating to electronic data programs or solutions,

which:

(i) aim specifically at:

   (a) supporting any activity included in the Restricted Sectors referred      to under 1. to 4.(Inclusive) above;

  (b) internet gambling and online casinos; or

  (c) pornography,

or which:

(ii) are intended to enable to illegally:

  (a) enter into electronic data networks; or

  (b) download electronic data

 

6. Life Science Sector Restrictions

When providing support to the financing of the research, development or technical applications

relating to

(i) human cloning for research or therapeutic purposes; and

(ii) Genetically Modified Organisms ("GMOs”),

 

Qualifying loans benefit from a guarantee funded by the European Union under the Programme for Employment and Social Innovation (EaSI)

 http://ec.europa.eu/social/main.jsp?catId=1081

 

 

In Other News

Recognition for helping othersPaul Barry-Walsh wins inaugural University College London/Business Reporter award THIS YEAR’S winner of the UCL/Business Reporter Entrepreneur of the Year award was Paul Barry-Walsh, for his work at the Fredericks Foundation. The aim of the award was to honour someone who has been successful in setting up their own business and then used their skillsto promote enterprise and provide opportunities for others – not just by handing over big cheques, but by making the most of their experience. Barry-Walsh set up the Fredericks Foundation in 2001 to help people set up new businesses or maintain or expand existing ones through providing them with loans. It has helped around 1,463 business start-ups and is open to anyone who has a viable business proposition but cannot obtain mainstream finance. Speaking after receiving hisaward, Barry-Walsh said: “I am very grateful. It has been an enormous privilege to help those people who have set up some wonderful businesses.“We only support people who have no chance to get funding from traditional sources like the banks. There are three things I really want to do. I want to support small business, because this is where all the diamonds are.“There are 11 times more patents from companies [with ] under 100 [employees] than big ones. In big companies you are far more busy having meetingsthan actually doing anything. Everyone matters in small companies – you all have a sense of a mission. When I started my first company it was wonderful – it was so free we could do what we wanted. “Lastly, I wanted to help those who did not have access to cash – everyone deserves a second chance. I do not believe in handouts, but I do believe in helping peopl up and supporting them.That is what we try to do.” Barry-Walsh believes it is good for the human spirit to be selfemployed, and one of the reasons why he started Fredericks was to help encourage that. “Even if people are earning no more money, they are at least in control of their own life,” he said. Barry-Walsh’s first business, Safetynet, was initially unable to raise the required funds of £300,000, forcing him to give away some of the equity in the business. He later sold the company to Guardian IT for £170million – but his philosophy is that business should be about far more than just making cash. “A lot of people go in there and say, I am going to get rich quick – I say, it is probably not going to happen like that,” he said. “You should be doing it because you love it, and want to make the world a better place. That is a message that has got lost. Bill Gates’s ambition was to put a PC on everyone’s desk, not to become the richest man in the world. “I do not believe in the Chicago school of thought, which says profit at all costs and that is your only responsibility. That is highly irresponsible. That contributes to the view of the fracture between business and society. That is pretty dangerous.” Barry-Walsh believes enterprise is important to society, and he thinks entrepreneurs should use their skills, black books and money to solve problems the state finds difficult. He believes every business should have a social purpose. “It is important for everyone to give back – business is good for society,” he said. “I feel quite passionate about that and sit on the Beacon Board to try to promote philanthropy. “It is very important that we build social purpose into the fabric of our business community, rather than have social corporate responsibility, which is the last thing on the agenda. It has to be within the organisation at its soul. It should start from the very beginning.” Barry-Walsh’s approach to running a business resembles the old-fashioned way of looking after the customer’s interests instead of your own. “What I always tell people is to treat employees and customers with respect,” he says. “Being fair is a really important thing – fair to your customers, fair to your employees, fai r to your shareholders. “And if you are open and transparent and fair, it is not a guarantee for success, but it is a good foundation for success. A lot of businesses have lost that.” The same philosophy is evident at Fredericks, where Barry-Walsh provides successful applicants with mentoring, practical business advice, networking and links within the local community to help support and grow new and expanding business. Expert advice is certainly something he regards as crucial to success. “When Apple was trying to start they managed to get some of the best brains from MIT to answer questions, completely for free.” he pointed out. “Most people are happy trying to help others. You can get tremendous support simply by asking for it.” Business Reporter would also like to thank everyone involved in organising the awards, as well as the other nominees on the shortlist: Jim Duffy, Kelly Hoppen, Luke Johnson, Jamie Oliver, Emma Sinclair and John Timpson
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