Union support for industrial competitiveness has accumulated over two decades into a landscape that even specialists find hard to navigate: many programmes, overlapping eligibility, different application mechanics and different reporting. The next budget cycle consolidates a substantial part of it into a smaller number of larger instruments.
Consolidation is broadly good news for applicants, but it changes the game. Fewer instruments means fewer windows, and fewer windows with larger envelopes attract more and better-prepared applicants. The premium on preparation rises accordingly.
Blended finance becomes the default shape
The more important structural shift is towards blending. Instruments are increasingly designed on the assumption that public support sits alongside commercial financing rather than replacing it — a grant or concessional tranche that de-risks a project sufficiently to make the commercial tranche bankable, rather than a standalone subsidy.
This design intent has a practical consequence that applicants systematically underestimate: it means the bankability of the commercial portion is part of the assessment. An application whose commercial financing is described as ‘to be arranged’ is weaker than one supported by an indicative term sheet, because the assessor’s question is not only whether the project is worthwhile but whether it will actually be built.
Blended instruments assess the commercial tranche as part of the public decision. ‘Financing to be arranged’ is now a weakness in the application, not a subsequent step.
China Everbright Bank Europe — Public Policy
Sequencing: bank first, apply second
The sequencing most applicants adopt — win the grant, then arrange the debt — is the wrong way round under a blended design. The stronger sequence is to develop the commercial financing case first, obtain indicative terms conditional on the public tranche, and submit an application that presents a complete capital structure.
That is harder work upfront and it requires a lending partner willing to invest time in a project that may not proceed. It also materially improves the probability of success, and it shortens the interval between award and financial close — an interval during which costs escalate and opportunities are lost.
- Start the commercial financing conversation before the application window opens, not after an award.
- Present a complete capital structure, with the public tranche identified as one component.
- Model the project without the public tranche as well as with it; assessors ask, and the answer is informative.
- Plan for the reporting obligations attached to blended funding — they are heavier than commercial covenants and run for longer.
Where we fit
Our corporate lending and structured finance teams work on precisely this kind of capital structure: a commercial tranche designed to sit alongside public support, with covenant and reporting architecture that accommodates both sets of requirements without duplicating them. We are willing to engage before an application is submitted, because in a blended instrument that is when the financing decision is actually being made.
What it means for clients
- Engage a lending partner before the application window rather than after an award.
- Prepare a complete capital structure showing the public tranche as one component of the whole.
- Budget for the longer and heavier reporting tail attached to blended public funding.
