Pre-financing Horizon 2020 projects

Funding for H2020 projects is based on reimbursement of costs. However, in order to provide beneficiaries with a “float”, certain amounts are granted at the beginning of the project.

There are three main payment types:

  • Pre-financing payment
  • Interim payment
  • Payment of the balance

The pre-financing payment is transferred from the European Commission to the coordinator. The coordinator then dispatches it to the beneficiaries in accordance with their share of the project budget “without unjustified delay”. (However, the coordinator may distribute this pre-financing only once the minimum number of participants (mentioned in the call text) have signed the Grant Agreement (via an electronic accession form), and only to those who have signed the accession form.)

There is no fixed amount – it is freely determined and written down in the Grant Agreement, signed between the European Commission and the project coordinator. The Commission makes the payment within 30 days from the start date of the action (which is determined in Article 3, GA) or from the entry into force of the Grant Agreement, whichever is the latest. 5% of the maximum grant amount is retained from the pre-financing and transferred to a “Guarantee Fund”. Pre-financing funds remain EU property until they are ‘cleared’ against eligible costs accepted by the Commission/Agency.

How to estimate the pre-financing one has right to?

As said, there is no standard pre-financing amount. However, one can calculate with 33% of the average EU funding per period (maximum grant amount/number of periods) if there are at least two reporting periods, but less if there is only one reporting period. The Annotated Model Grant agreement provides the following example:

Maximum Grant Amount

€ 1 000 000 (100% reimbursement rate)

Pre-financing

€ 333 334

Amount to consortium (coordinator)

€ 283 334

Guarantee Fund

€ 50 000

Pre-financing for the SME Instrument

For the SME Instrument, only two payments will be made:

  • Pre-financing, and
  • Payment of the balance

Otherwise, the same principles apply:

  • The pre-financing remains property of the EU until the payment of the balance.
  • The amount can be freely negotiated and is marked in the Grant Agreement.
  • Payment is made 30 days from the starting date of the action or from the entry into force of the Agreement, whichever is the latest.
  • 5% of the maximum grant amount is retained from the pre-financing and transferred to a guarantee fund.

The same provisions apply for SME Instrument mono-, and multi-beneficiary, and both phase 1 and phase 2. However, for Phase 2, interim payments are also foreseen.