How does EU funding work?

This page explains the basics: what kinds of money exist, which programmes offer them, who is allowed to apply and what you have to put in yourself.

Amounts and rules change with every work programme (the official plan that sets out each programme's calls, budgets and rules). We don't quote fixed figures that may be out of date. Always check the call page and its work programme.

What is the basic idea?

The EU agrees a long-term budget, and part of it goes into programmes for research, innovation, digital, environment and business growth. Each programme publishes calls for proposals. Each call contains one or more topics, which are the specific things the EU wants to fund. You apply to one topic, experts score the proposals, and the best ones receive funding.

What types of EU funding are there?

Grants

A grant is money you don't pay back. It covers part or all of the eligible costs of a project, such as staff, equipment and subcontracting. In return you must carry out the project you promised and report on it. Grants are the most common type of EU funding.

Equity investment

Some schemes invest money in your company in exchange for shares. The best-known example is the EIC Fund, which invests in companies selected by the EIC Accelerator. You don't repay it, but the EU becomes a shareholder.

Blended finance

Blended finance means a grant and an equity investment combined. The EIC Accelerator offers this to scaling deep-tech startups. Depending on the case, companies may receive grant only, equity only, or both.

Loans and guarantees

The EU doesn't usually lend directly to small businesses. Through InvestEU, it backs loans, guarantees and investments made by banks, funds and national promotional banks. You apply to your bank or the fund, not to the EU. These loans must be repaid.

Prizes

Prizes reward achievements rather than funding a future project. For example, the EIC runs the European Prize for Women Innovators. Applications are often shorter and simpler than for grants.

Cascade funding (financial support to third parties)

Some EU-funded projects receive money to pass on as smaller grants to startups and SMEs through their own open calls. These calls are usually much simpler and quicker than direct EU calls, which makes them a great first step for beginners. They are often called "open calls" or "FSTP".

What are the main EU programmes for startups and SMEs?

The full list of EU programmes is on the Commission's EU funding programmes page.

What are EIC Pathfinder, Transition and Accelerator?

• EIC Pathfinder funds early-stage research toward radically new technologies. It is often done by consortia that include universities or labs, but startups can take part too.
• EIC Transition helps turn promising research results into a validated technology and a business plan.
• EIC Accelerator is for single startups and SMEs scaling a deep-tech innovation. It offers grants, equity or both, plus coaching.

Details and amounts are in the EIC Work Programme 2026.

Who can apply for EU funding?

Depending on the call, applicants can include companies (startups, SMEs and larger firms), universities, research organisations, public bodies, non-profits and sometimes individuals. Every call has eligibility conditions that say exactly who can apply. Read them first. If you don't meet them, your proposal won't be evaluated.

What counts as an SME?

The EU has an official SME definition based on staff headcount and annual turnover or balance sheet total. It also counts the size of companies linked to or partnered with yours, for example a large shareholder. Check the official definition before you call yourself an SME in a proposal.

Which countries are eligible?

Organisations in the 27 EU Member States are always eligible. Many programmes also accept Associated Countries, non-EU countries with an agreement to take part (see association to Horizon Europe). Other countries have case-by-case rules. For Horizon Europe the official list of participating countries explains who can receive funding. Each call can add its own country rules too.

Do I need partners, or can I apply alone?

When a consortium is required, the call usually sets a minimum number of partners and countries. Partner-search tools on the portal and your National Contact Point can help you find partners.

Does EU funding cover all my costs?

Not always. Each type of action has a funding rate, the share of eligible costs the EU pays. Some research actions cover all eligible costs, while innovation actions for companies often cover only part of them, so you fund the rest yourself (this is called co-funding). Rates differ by programme and action type and are set out in each work programme and the Annotated Model Grant Agreement.

• Eligible costs typically include staff, travel, equipment, subcontracting and other direct costs, plus a share for overheads. The exact rules are in the grant agreement.
• Payments usually arrive in instalments: a pre-financing payment at the start, then payments after reports are approved. Plan your cash flow for that.
• Your own costs: writing a proposal takes time, and if you hire a consultant you pay them yourself. Applying is free.

How are proposals selected?

Independent experts score proposals against published criteria, usually excellence (how good and new the idea is), impact (what difference it makes, including the market) and quality of implementation (team, plan, budget). Some schemes, such as the EIC Accelerator, also include an interview. The highest-scoring proposals are funded until the budget runs out.

Next: find the right programme for your stage →