Transaction Costs Support for social finance intermediaries

Eligibility is assessed at the level of the investee and against the definitions set out in Section 2 of the Call Document. The investee must meet either the definition of a social enterprise or the criteria for a mission-driven enterprise set out in the Call.

The 10% indicative ratio is calculated on the total capital directly invested or mobilized by the grant beneficiary(ies), including co-investor capital when there is evidence that the beneficiary(ies)' involvement (mobilisation activities) led to that investment. The expected share in the portfolio will need to be clearly mentioned and explained in the proposal.

The total expected investment portfolio used to calculate the 10% indicative ratio shall be the same as the one used for the eligible investments, and the € 1m over 18 months threshold has to be respected.

The total expected investment portfolio excludes capital mobilized independently of the grant beneficiary(ies), whether in the same financing round or in subsequent transactions. Please refer also to Q&A ID 98466.

The established legal entity of a crowdfunding platform authorised under ECSPR that operates a syndication scheme is eligible as single applicant or lead applicant as a co-investment scheme of any form. Applicants are reminded that the long-term risk capital investment supported under this call must take the form of equity, quasi-equity or hybrid financing as defined in Section 2. Crowdfunding platforms whose product mix combines eligible and non-eligible instruments (e.g. plain debt / lending) must clearly ring-fence, in the proposal, the pipeline and the transaction costs relating to the eligible instruments. Only the transaction costs of the eligible investments will be reimbursed.

The link to the list of eligible countries is provided in the Call test in page 12. List of participating countriesPDF

The Western Balkan countries associated to the ESF+ are Bosnia and Herzegovina, Kosovo, Montenegro and Serbia. Albania is not included any longer.

As per the Call for proposals text, the long-term risk capital investment can reach per investee at maximum EUR 1 000 000 over a period of 18 months.

This means that if a second investment in the same social enterprise or mission-driven enterprise takes place within less than 18 months from the first investment and this raises the cumulative amount invested above the limit of EUR 1 000 000, the costs of the activities related to the first investment become ineligible for grant support.

The set maximum EUR 1 000 000 capital investment ceiling over a period of 18 months applies only to the investments originating from the Grant Beneficiary(ies). By Grant Beneficiary we understand the Investment Fund, or the Fund-of-Funds, or the Special Purpose Vehicle, or the (co-)investment scheme of any form, who applied as Single Applicant or Consortium Lead applicant, and in case of a Consortium all the partners involved the Consortium.

An equity or quasi equity investment of an independent third party which may happen following the initial investment of the Grant Beneficiary do not influence the eligibility of the costs of the activities related to this first initial investment.

As indicated in Section 6 of the Call Document, under “Consortium composition”, both applications by single applicants and consortia are allowed. In the case of a consortium, all members must comply with the eligibility criteria set out in Section 6.

The same section specifies that the single or lead applicant must be either the established legal entity of an investment fund, Fund-of-Funds, special purpose vehicle or (co-)investment scheme, of any form, or the organisation managing such a vehicle or scheme that is ready to be established.

As provided in Article 190(1)(b) of Regulation (EU, Euratom) 2024/2509, entities shall be considered as affiliated to the beneficiary if they satisfy the eligibility criteria, are not in a situation of exclusion and have a legal or capital link with the beneficiary which is neither limited to the action nor established for the sole purpose of its implementation. Hence being held 100% makes the investment vehicle an affiliated entity of the association.

As per the Call text In order to be eligible, the applicants (beneficiaries and affiliated entities) must be established in one of the eligible countries, i.e. in an EU Member States (including overseas countries and territories (OCTs) or in a non-EU countries listed EEA countries and countries associated to the ESF+ (List of participating countriesPDF)

UK established organisations are not eligible under this call as beneficiaries and affiliated entities but could participate in other consortium roles, such as associated partners, subcontractors, third parties giving in-kind contributions, etc (see section 13).

UK- based organisations can be associated partners under this Call. Associated partners are participating in the action but without the receiving EU funding and without being signatories of the Grant Agreement.

In the event a UK based organisation is selected as subcontractor of an EU based beneficiary under this Call, the beneficiary will have to prove that the hiring of the said UK based subcontractor is the most cost-effective option compared to EU-based entities and will have to choose its subcontractor in line with the applicable rules set in the Grant Agreement.

UK-based organisations can be a third party giving in-kind contribution for this Call. Associated partners and third parties giving in-kind contributions should bear their own costs (They participate without funding and are not signatories of the grant agreement).

All activities included in the proposal will have to take place in the eligible countries as per Section 6 of the Call Text, there are no exceptions.

In order to be eligible, ALL applicants (beneficiaries and affiliated entities) must:

− be legal entities (public or private bodies)

− be established in one of the eligible countries, i.e.:

- EU Member States (including overseas countries and territories (OCTs))

− listed EEA countries (Iceland and Norway) and countries associated to the ESF+ (Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, Serbia, Ukraine)

The additional requirements set under Section 6 Eligibility apply only to Single Applicants and to the Lead Applicant of a Consortium.

Please refer to the publishedQ&A ID 101586 and Q&A ID 98466.

The 10%/15% ratio applies to the eligible portfolio covered by the action, not to the fund’s full portfolio.

Specialised advisory fees may be eligible where they are necessary for, and directly linked to, the eligible investment activity. Please refer to section 10, under “Budget categories and cost eligibility rules”, of the call text regarding the eligible cost categories.

The call supports activities related to the preparation, conclusion and follow-up of eligible long-term risk capital investments in social enterprises and mission-driven enterprises. Please refer to section 2 of the call text.

Temporary-use and business-model validation costs may be eligible if they fall within those funded transaction-related activities and are directly linked to eligible investment operations under the call. Please refer to section 2 of the call text.

The action will normally start after signature of the Grant Agreement. A retroactive starting date may be accepted only exceptionally, for duly justified reasons, and can never be earlier than the proposal submission date (p. 19 of the Call document). Preparatory costs incurred before the submission of the proposal therefore cannot be eligible. Costs incurred after the proposal submission date but before the Grant Agreement signature date could be eligible only if a retroactive starting date is expressly approved. Please refer to Q&A (ID 98468) on transaction costs linked to investments that took place before the grant.

Costs for services provided by third parties may be considered eligible where they are directly linked to the transaction to be supported and subject to the applicable eligibility conditions under the call.

Since the non-profit association acts as the sole shareholder and permanent governing body of the fund, it would be appropriate for the association to act as Coordinator and the fund as Affiliated Entity. The association may fall under the eligibility criterion covering a “(co-)investment scheme of any form”. Both entities may incur eligible project costs, subject to the applicable eligibility conditions.

As indicated in Section 10 of the Call Document, the grant reimburses eligible costs actually incurred for the implementation of the project and declared under the applicable budget categories. Transactions between related entities should be transparent, and the same costs must not be declared more than once under the grant.

Please refer to published Q&A ID 101586.

NO, transaction costs linked to investments that happened before the grant award are not eligible costs.

The idea of this call for proposal is to generate more investments in social enterprises and mission-driven enterprises and support overcoming the market gap for small tickets.

The purpose of the Call for proposals is to create additionality, to serve as a blending tool to help social finance intermediaries to provide more low-value tickets that would not happen without this kind of help because the fixed costs would be too high.

The Call text reads under Themes and Priority (p.9) and under Project Budget (p.14) the indication that the overall support request for the transaction costs should not exceed 10% of the total expected investment portfolio in social enterprises and mission-driven enterprises. For applicants with average investment ticket of less than EUR 300 000, the support request should not exceed 15% of the total expected investment portfolio.

This means that indicatively, an expected investment portfolio of EUR 5 000 000, Commission services expect to receive a project proposal (EU grant request) of approximately EUR 500 000. The project proposal budget could be higher, up to 15% if the average investment ticket is lower than EUR 300 000. As clearly stated in the Call text, this is an indication and aims to set a cost efficiency frame.

No, as per the Call text the key objective is to catalyse risk capital investments below EUR 1 000 000 that otherwise would not happen in the area of social enterprise finance. The call aims to support exclusively the transaction costs for these low value investment tickets below EUR 1 000 000.

As indicated on page 9, the list of eligible activities is not exhaustive and may include, among others, points A and B. A single project proposal may cover eligible activities from both categories: a) The activities related to the preparation, conclusion and follow-up of long-term risk capital investments and b) Activities related to the overall EU value-added and the innovative dimension of the financing schemes.

The applicants are free to select the type of activities and possible combination in their proposals. The Call text does not set any specific requirement on activity allocation and/or budgetary repartition.

The Call Document does not prescribe an exhaustive list of documents to demonstrate compliance with the mission-driven enterprise definition. No specific published guidance or examples are provided. Applicants should explain in their proposal how they will assess investees against the Section 2 criteria.

The grants provided under this Call are EU funds centrally managed by the European Commission. They do not constitute State Aid in the meaning of the Treaty on the Functioning of the EU.

As per the the Call text, an investee (beneficiary of investment) to be eligible needs to be either a social enterprise or a mission-driven enterprise. The definitions applied under this Call are provided in pages 8 and 9 of the Call text.

A priori the mentioned examples comply with the definitions and can be selected as investees.

We confirm that the aim of the Call for Proposals is to support long-term risk capital investments. The Call text does not set a limitation to the duration of these investments.

The objective of the Call for proposals is to support low-value investments. As a matter of principle, the portfolio amounts announced in the application / proposal are expected to be effectively disbursed within the time-frame of the project.

If specific circumstances justify an exception to this rule, these should be clearly explained in the proposal and accompanied by appropriate indicators, so as to allow the Commission’s services to adequately assess the proposal and, if selected, to subsequently monitor the project’s performance.

All applications / proposals shall include a set of realistic and measurable indicators allowing the monitoring of the implementation. The level of achievement or potential deviations will need to be detailed and justified in the final reporting phase and will be assessed accordingly by the Commission's services.

The € 1,000,000 threshold over 18 months applies per investee to the cumulative amount of long-term risk capital investments originating from the Grant Beneficiary(ies). This includes the full amount invested by the Grant Beneficiaries, including investments made through a beneficiary Special Purpose Vehicles (SPV) irrespective of the SPV’s underlying sources of capital. It also includes capital invested separately by co-investors where there is evidence that the Grant Beneficiary’s direct mobilisation activities led to that investment. Capital mobilised independently of the Grant Beneficiary(ies) is excluded, whether it is invested in the same financing round or in a subsequent transaction. Participation in the same financing round is therefore not sufficient to determine whether third-party capital counts towards the threshold. Please also refer to published Q&A ID 98466 for further clarification on the application of the EUR 1,000,000 threshold.

Communication and stakeholder reporting costs may be eligible where they are necessary for, and directly linked to, the eligible investment activity. Please refer to section 2 of the call text.

With reference to section 2 of the call text quasi-equity is understood as a type of financing that ranks between equity and debt, having a higher risk than senior debt and a lower risk than common equity As an example and non-exhaustively, the call also mentions that quasi-equity investments can be structured as debt, typically unsecured and subordinated and in some cases convertible into equity, or as preferred equity.

Hybrid financing is understood as any flexible form of repayable finance combining characteristics/features of at least two of the three instruments (grant, debt, equity).

Consequently, none of the three features - equity conversion, contractual subordination, revenue-linked repayment - is individually required for an instrument to qualify.