Understanding EU Funding & Programmes

EU funding is money from the European Union to support projects that help EU goals (for example: greener business, digital tools, new skills, or stronger regions). It is used to reduce gaps between regions and to help businesses and communities grow. Funding is given through programmes and calls that pay part of your project costs if your project matches the call.

EU funding comes from the EU budget and follows EU rules and EU priorities. National or regional schemes are paid from your country or region’s public budget and follow local rules. In practice, EU funding and national funds vary on the way and place of application but sometimes they finance similar types of opportunities. Always check the call: who manages it, what it funds, and what paperwork is needed.

More information: EU funds originate from the European Union budget, which is financed primarily through Member States’ contributions and other EU-level revenue. These funds are designed to support EU-wide policy objectives, such as cohesion, green and digital transitions, innovation, skills, rural development or maritime sustainability.

Depending on the fund, financing can be provided through:

• Direct management (managed by the European Commission and its executive agencies)
• Shared management (co-managed with national and regional authorities).
• Different forms, including grants, financial instruments (loans, guarantees, equity), cascade funding for SMEs, or sectoral programmes such as those under Cohesion Policy (e.g., ERDF, ESF+, CF, JTF, EMFAF, EAFRD).

National funding schemes, by contrast, are financed directly from each country’s public budget and respond to domestic political, economic and territorial priorities. They may include national grants, subsidies, tax incentives or thematic programmes designed to address region-specific or sector-specific needs. While national schemes often have more flexible procedures and a narrower scope, they do not necessarily align with EU policy frameworks unless explicitly co-funded together with EU programmes.

In practical terms, the main differences lie in the origin of the resources, the policy objectives they pursue, the types of financial instruments available, and the administrative rules governing eligibility, reporting and co financing obligations.

In direct management, the European Commission (or an EU agency) runs the call: you apply on the EU portal and compete EU-wide. In shared management, the EU sets the overall rules, but your national or regional authority runs the call, and you apply locally. Many practical SME opportunities (training, small investments, green or digital upgrades) are often in shared-management programmes but the EU also offers targeted funding to SMEs.

More information:

• Direct management funds are EU programmes that are run entirely by the European Commission, meaning that the Commission itself publishes the calls, evaluates all applications and signs the grant agreements. For an SME, this means applying directly through EU level portals such as the Funding & Tenders Portal and competing with organisations from all Member States. The programmes operating under this system include Horizon Europe, the Single Market Programme and its SME window SMP COSME, the Digital Europe Programme, the Innovation Fund, EU4Health, LIFE, Creative Europe, the European Defence Fund and Erasmus+.

• Shared management funds are jointly administered by the European Commission and the national or regional authorities. While the Commission sets the rules, calls and selection processes occur at national or regional level. This category includes the European Regional Development Fund (ERDF), the European Social Fund Plus (ESF+), the Cohesion Fund (CF), the Just Transition Fund (JTF), the European Maritime, Fisheries and Aquaculture Fund (EMFAF), the European Agricultural Fund for Rural Development (EAFRD) and the European Agricultural Guarantee Fund (EAGF).

• For SMEs — especially tourism SMEs — this distinction matters because most relevant opportunities (digitalisation, training, green transition, small-scale investment, rural tourism, etc.) are financed through shared-management instruments accessed locally rather than directly via EU portals.

A grant is money you usually do not pay back, as long as you follow the rules & deliver what you promised. Financial instruments (like guarantees or equity) & loans must be repaid, but they can be easier or cheaper than normal bank finance because the EU shares the risk. Always check the call to see what type of support it offers.

More information:

• Grants are the simplest form of EU funding for SMEs because they are non-repayable if the company follows the rules of the grant agreement. They typically fund training, digitalisation, pilots, or small investments and are awarded through competitive calls.
• Financial instruments, are repayable tools (loans, guarantees, equity) designed to ease access to finance, reduce lender risk and improve financing conditions (lower interest, reduced collateral).
• Loans supported by EU mechanisms are also repayable, channelled via Member States or intermediaries & often benefit from EU guarantees or interest-rate reductions

In short, grants are money you do not repay, financial instruments are repayable tools designed to make access to finance easier for SMEs, & loans are repayable credit made more accessible thanks to EU guarantees or support schemes.

Often yes. Many SMEs access small grants through ‘cascade funding’ (also called Financial Support to Third Parties). The EU funds a bigger project, and that project then launches simpler open calls for SMEs (usually smaller amounts, faster decisions, lighter applications). These are often for pilots, testing, or quick adoption of solutions.

How it works in practice

• You apply to an open call run by the EU-funded project (not directly to the commission)
• If selected, you receive funding as a “third party”, with reporting requirements defined by that project
• The topic is normally tightly linked to the parent project’s objectives (often digital/innovation-oriented)

A useful place to start is the Commission’s overview of Cascade Funding Calls / FSTP hosted within the Funding & Tenders environment.