Financial capacity check

Before a grant is signed, the Commission checks whether the organisation can survive its share of the project. The check applies to coordinators requesting a substantial EU contribution (the usual trigger is €500,000 or more) and can be extended to other beneficiaries where there is reason for concern.

It is arithmetic on your last approved annual accounts: liquidity, financial autonomy, solvency and profitability, combined into a score. Public bodies, international organisations and secondary or higher education establishments are exempt, on the reasoning that a state does not go bankrupt in the way a company does.

A weak result does not automatically end the matter. The usual responses are graduated: reduced pre-financing, a bank guarantee, a requirement that the entity not act as coordinator, or in the worst case exclusion from the grant. A young company with a strong balance sheet and no trading history is a routine case, not a hopeless one.

The most common problem is not weakness but absence. A recently founded entity has no approved annual accounts to assess, so it must supply what it has: a declaration, an opening balance sheet, evidence of capital or committed investment. Assembling that during the signature window, under time pressure, is the avoidable part.

The practical lesson for a small organisation is to avoid coordinating its first large project. Being a partner attracts the check far less often, the exposure is smaller, and the coordinator's balance sheet carries the burden that yours is not yet ready for.