THE MONEY ACADEMY
The race for EU Funds
The EU funds fever is on and it seems that everybody is trying to find a way to access the great opportunities the EU funds programs are offering for different kinds of companies, including start up’s and SME’s in Romania . The main attraction is of course the fact that a major part of this financial support is given in the form of grants, meaning – non reimbursed funds. Being so, it is clear that to gain such a wonderful type of support, all the related entities must verify your eligibility and the correct funding management, so they can be sure their excellent support will be directed to the right channels.
Resulting to that, in the practical level, once you finally approach the existing information sources, to find out how to apply and what are the possibilities, you will soon find out, that it is very hard to understand what are the eligibility criteria, who can apply, up to which limitations and even what is the actual program to fit you and your needs. The solution as always is - working with specialists, in the form of a consultancy company which will support and direct you through the way and can actually save you time and money throughout the whole process, while increasing your chances to actually realize the grant funding.
By Osnat Peled, General Director - Mentor Finance (Private equity) & BWFR president.
Choosing an EU fund specialist
Once you acknowledged the fact you must work with an expert on your projects, the next challenge will be - who shall be that expert? The market is overloaded with all kinds of companies as well with private individuals, offering their services in all ranges of prices and terms…this can be very confusing .
I went out to search for some help and clarify the whole guideline.
Johannes Becker was the Commercial Attaché of the Austrian embassy in Romania. He fell in love with the country, decided to continue his
path and initiated his firm - Becker Consult, a boutique consultancy firm specialized in EU funds. The firm specialists are preparing the documentation for EU- and nationally funded projects in Romania – mostly focused on EU-
Structural Funds and Romanian national funding schemes; Johannes shared with us his know-how and former experience in the EU funding domain.
Common mistake of entrepreneurs while applying for EU funds
According to Becker, There are several typical mistakes entrepreneurs are making when they are looking to apply or start to apply for EU funds. Many potential clients have unclear ideas regarding their project; they simply want to receive funds without having a clear picture of what kind of project they intend to implement. Usually these are very young companies without a clear profile.
Therefore: think first about what you want to do, what you actually can do, and then - there will be possibilities for funds. Related to this is the fact that at least for EU-funds companies without proper experience in a certain domain will hardly have chances to have success.
Only the companies that have the best chances to successfully implement their projects will receive funds, and this requires a certain experience
Are you feasible at all?
Another problem is that clients sometimes tend to over-optimize the amount of funds they can receive. Either they plan a project that is too big for their actual needs, or they start twisting and interpreting the eligibility criteria to maybe obtain a little bit more funds for this or that - both approaches are risky.
One never should forget that a project should be viable also without EU-funds.
The project must show clear feasibility even without the EU funds at all! Therefore, it should be of an appropriate size - and rules and regulations of the funding programs cannot be interpreted.
We keep hearing that “EU funds can fit only people who have money “– is this correct?
According to Becker, this is being said because you always need to co-finance a project, and especially small and young companies often have difficulties to obtain even a small loan from a bank.
In most of the cases, companies have to be profitable to be eligible.
We both agree this is creating “a loop” … a small company with no profit will mostly need the support of the EU funds , but will be also requested to bring co- finance, as the EU funds will not cover 100% of the investment . On the other side having no profit will not convince the bank to support with the co finance needed. The EU funds approach to the described loop is usually not to help a company that is losing money with EU-funds, but better to help the fittest to become stronger.
Let’s be prepared – start right at the first stage
In any kind of financing process, the strength and weakness are always around the preparation of the file. Same goes for EU funds, but there are several ways even for a small company to prepare themselves financially to the process of EU funds.
First, as Becker suggests, you have to start with a proper cash flow analysis to check whether you will be able to pre-finance and co-finance an investment, and to survive also in case that t
he funds will be paid later than expected. “I've seen many cases where the company was not well prepared to submit a request for funds since they did not have the slightest idea of their cash management and liquidity. These are the cases when companies fail during the implementation of an EU-funded project, they simply run out of cash during the implementation period.” He adds.
Grant the Grant
One of the most common questions is related to the desire, knowing in advance whether our company will eventually receive the grant or not. However, according to Becker track record, there is unfortunately never a guarantee that a project will actually receive the grant. Even so, much can be done to prevent failure, starting with the careful preparation of the documentation needed for submission and an honest pre-evaluation of the chances of a project. Be careful in believing to consultant who guarantee 100% success as there is no such…it is very important to request a pre evaluation of your documents and receive a professional and honest feedback in regards to your chances.
Set your expectations
The relationship with the chosen consultancy company can be crucial for the success of the file, similar to your work with your lawyer and accountant and based on the same elements
Becker shares some crucial tips in this aspect, such as - the consultant shall honestly evaluate your situation and tell you how your chances are.
Once you have agreed to start a collaboration with the chosen consultant, you should be careful and verify that the consultant is really preparing the project you want to implement, and not the project he thinks you want to implement. This is mostly a matter of communication. The more time you reserve to talk with your consultant, the more detailed you respond to his questions, the better the project will be
This of course means that also you as the client will have to spend maybe more time for providing information than you initially expected.
But the more time you invest in a project, the better the chances for success are.
So we are going back to the same elements – transparency, good communication and a professional approach, same as we always do in any kind of financing. Keep following the above elements will probably increase any kind of success rate in business.
Want to know more? Have any questions?
Join us at “The Money Academy” workshops in Business women forum Romania (Free membership)
All the details are here - www.bwfr.org
Osnat Peled, General Director of Mentor Finance (from Mentor group Holdings consortium) has relocated to Romania from Israel. Having 19 years of business experience she has been working with banks, governments and leading companies in assisting them to achieve their business goals and recruit financing.
Mentor Finance provides financing solutions to companies, developers, entrepreneurs and NGOs in all types of domains. www.mentor-finance.com
Foto: Sebastian Moise Make-up: Monica Panait Şedinta foto a avut loc la Hotel Prince Park Residences Bucureşti *Articol apărut în Business Woman Magazine, ediţia 69
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