EU Employment and Social Affairs Ministers have agreed on a new facility to provide loans to people who have lost their jobs and want to start or further develop their own small business.

The European Microfinance Facility will have a starting budget of 100 million euro which could leverage more than 500 million euro in co-operation with international financial institutions such as the European Investment Bank (EIB) Group, a media statement on March 8 2010 said.

The initiative is part of the EU's response to the financial and economic crisis and is especially targeted at people who cannot normally obtain credit because of the economic crisis and the current lack of credit supply, the statement said.

Speaking at the Ministerial meeting, László Andor, EU Commissioner for Employment and Social Affairs and Inclusion, said that the Microfinance Facility offers an alternative to those suffering from the effects of the crisis and will help create new jobs.

Welcoming the initiative, Andor said: "It will increase the supply and accessibility of microloans so vulnerable groups find a way out of unemployment. It will also boost entrepreneurship and the social economy in Europe.

"We expect the facility to provide small loans to around 45 000 budding entrepreneurs over the next eight years."

Those helped under the initiative will also be able to benefit from mentoring, training and coaching as well as assistance in preparing a business plan, in close co-operation with the existing European Social Fund.

Micro-credit in this Facility means loans of less than 25 000 euro.

It is tailored to micro-enterprises, employing fewer than 10 people (91 per cent of all European businesses), and unemployed or inactive people who want to go into self-employment but do not have access to traditional banking services.

Ninety-nine per cent of start-ups in Europe are micro or small enterprises and a third of these are launched by people who are unemployed, the media statement said.