SME Instrument

In order to enhance the participation of SMEs in EU innovation programmes, the European Commission has put in place a new funding instrument scheme, the so-called SME Instrument. This instrument is designed to help European enterprises commercialize their innovative solutions.

SME Instrument – part of the European rationale

The SME Instrument falls within a broader EU strategy for an Innovation Union which, among other things, seeks to “ensure stronger involvement of SME in future EU R&I programmes”.

The SME Instrument is part of the “Industrial Leadership” and “Societal Challenges” pillars. Innovative projects using in Key Enabling Technologies, or addressing issues such as food safety, green energy and transport, smart infrastructures, climate action, business model innovation, or e-government, will be funded.

Attractive conditions and funding rates

Contrary to other Research and Innovation Actions, one single SME can apply. A consortium is possible, but not required.

€3 billion are earmarked for 2014-2020 for ground breaking innovative ideas specifically designed for exploitation. As in “innovation actions”, 70% of eligible costs will be reimbursed.

Besides the financial aspects, the SME instrument confers on the company an informal EU “quality label” and Europe-wide. Furthermore, participants can benefit from optional business and management coaching.

Evaluating the potential of applicants

Any SME within the EU or from a Horizon 2020 associated country can apply for this EU grant.

The EU definition for micro, small and medium-sized enterprises:

“The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro.” (Article 2 of the Annex of Recommendation 2003/361/EC)

Applicants have to be highly innovative, be well-established in their domain and – ideally -  have global ambitions, and a clear idea about the commercialisation of their idea.

The evaluation of the proposal will consider these three criteria:

  • The company’s competence to bring the project to fruition;
  • The level of excellence of the proposed innovation (beyond state-of-the-art); and
  • The strong potential for commercialisation, as well as the economic impact of the project.

A phased support: from feasibility to commercialisation

The mechanism is divided into three standalone phases: participation in phase 1 is not necessary to apply for phase 2.

The three phases of the SME instrument are the following:

  • Phase 1: This phase provides financial and coaching support for the elaboration of a feasibility study, demonstrating the commercial opportunity and a first business plan. The allocated funding is a lump sum of €50 000.
     Phase 1 should last around 6 moths. The outcome of this phase is  a technical and commercial feasibility study.
  • Phase 2: This phase will finance demonstration and market replication activities with a grant going from  €500 000 to €2,5 million.
  • Phase 3 of the SME instrument does not offer any funding. It is however crucial for the commercialisation and internationalisation of the product, service or process created in Phase 2. Through the Enterprise Europe Network, companies are offered commercialisation advice, internationalisation support services, facilitated financial access, as well as networking opportunities with investors and customers.