Our communities are being hit hard by the Covid19 crisis, especially our small and medium sized enterprises. As a consequence Europe faces a serious risk of a deep and lasting recession. It is in the interest of both private investors and regional authorities to avoid that the recession becomes a full depression. Let’s join forces to support SMEs in communities across Europe. In many countries there is funding to support the companies that are hit hardest by the lockdown and to prevent a further recession and create a truly sustainable recovery. But sources to provide this support are limited. That raises the question: Is it possible to increase the impact of the funds available? To do more with less?

The solution is an innovative fintech solution - the Impact Multiplier - based on a tried and tested fintech solution that can set rules for money to make it boost recovery by increasing the velocity of the circulation of money in a community. By increasing the circulation of money among local SMEs, the impact of public and private recovery and investment funds.

Consumers can join the initiative by buying European Solidarity Vouchers and spend through the Impact Multiplier. Or they buy now and enable credits to suffering businesses and consume later. The introduction of the tool will need initial start up funding, but soon the approach will be self sustaining and can even fund community organisation and civil society activities for a truly healthy and sustainable recovery.

Regions join a consortium

Presently a consortium of regions and large cities in five European countries are interested to introduce, test and implement the impact multiplier. Soon more will follow and the objective is to start a pilot in every country joining the consortium.

The Impact Multiplier

Local governments are eagerly looking to generate a recovery of businesses in their communities. So are private investors, because if nothing happens they will suffer severe losses on their investments. Both sectors share a common interest to increase the impact of funds for recovery.

The Impact Multiplier system is a fintech platform based on the software Cyclos. Beneficiaries receive money on a dedicated account with a set of rules that optimizes the circulation of the money in the targeted community of SMEs.

Funding from various sources is digitally rooted to multiply its impact in two ways:

  1. The money will be available to staying for a minimal period to circulate between the participating SMEs.
  2. A small daily fee, a negative interest, on the circulating money incentivizes participating enterprises to spend quickly, allowing others to earn and spend more within the community, all the while healing the recession and socio-economic damage.

This increases the income of all SMEs, including those companies that don’t receive government support, while they do suffer from the economic crisis caused by Covid19. Previous use of this technology in local systems shows that this enables money to circulate at least three more times within a community of users than otherwise would be the case. Applied to recovery funds and investments, this could make a substantial contribution to the recovery of small enterprises and the economy of the regions they operate in.

The proceeds from the negative interest rate will go to maintain and extend the system, repay the investments, and also fund civil society actors in order to induce full-scale recovery towards a healthy and sustainable democracy in Europe and greater social inclusion.

The additional income for SMEs generated through the system brings additional tax income for governments to retrieve part of their investments in recovery.

It is important to highlight that this system can continue to operate beneficially far beyond the Covid19 crisis. adding to the socio-economic resilience.

Business case

For the first pilot we would need:

  • funding for the preparation of pilots and for the inclusion of regions in the other EU countries
  • In every country a regional government that commits to spend at least 20 million euro through the dedicated payment system. This could be part of the normal public expenditures, relief funds, donor money or money from private investors.
  • At least 10,000 SMEs from one region would preferably participate at the start of the pilot in each country. To compensate for the (temporarily) limitation of places to spend, the companies receiving the transfers will get a 7,5% premium.


  • Pilot preparation and launch: 0.5 million euro. Activities: publicity, engagement with local authorities, outreach and community building, configuration and customisation of the software, onboarding of SMEs, set up cooperation with financial partner,
  • 7,5% premium costs. Per region between 20 and 40 million is 1.5 - 3 million euro per region.
  • implementation costs year 1: 0.5 million euro Activities: helpdesk, publicity, brokering, administration, developing new features if needed, outreach to civil society sectors

Sources of income:

  • The negative interest fee to stimulate rapid circulation will be set at 11,5% a year. With a transfer of 20 million this means +2,3 million euro revenue accrued at the end of year 1. A multiplier of 6 (which is the minimum number in existing projects of this size), will result in a total turnover would be 120 mln euro = 12,000 euro for each participating company. The total costs for the SMEs are 2,3 million = 230 euro per SME. Paying 230 euro to get 12,000 euro (additional) turnover is a very profitable deal!
  • During the first year the project reaches its break-even point
  • Start-up costs for a full pilot are estimated at 0.5 million euro.

According to Eurostat, 97.8%of companies in Europe are SMEs or micro-enterprises, more than 23 million companies. Reaching even a fraction of these companies at local level would have enormous potential for long-term impact.

Cyclos: How we built it

Cyclos is a fintech software that won the international E-pay Innovation Award 2014 (ETA), and was supported by the Gates Foundation and the European Commission to realize pilots such as Sardex in Sardinia. (Competitiveness and Innovation Programme, 2014-2017)

Cyclos has over 10 million end users worldwide, and delivers a dedicated tailor-made platform for this project.

To provide a sense of previous experience: Cyclos user Sardex operating since 2009, reaches a multiplier between 6 and 12 times of mutual credit-based money, resulting in 20,000 euro of additional annual income for the average SME, making significant impact for the 5,000 SMEs participating in this dedicated payment system, adding up to 100 million Euros of additional income annually.

The innovations in Cyclos are embedded in a feature-rich online banking solution that is easy to use and maintain, flexible, secure, and highly customizable. Cyclos comes with a range of banking options to facilitate the payment environment dedicated to increase the impact of money: a loan module, a complete e-commerce system with a marketplace, and high and low-end mobile access channels.

Challenges we ran into

  • Getting in touch with local and regional authorities during the hackathon.
  • At the hackathon we got in touch with the initiator of the “European solidarity vouchers for tourism” project. Because this project is highly compatible and complementary with ours, we decided to join forces. In the voucher project the focus is on consumers: they will be able to show their solidarity and buy vouchers that enable loans for vulnerable businesses in the tourism sector, but also add more money to get its impact multiplied. It was quite a challenge to finetune the cooperation.

Accomplishments that we're proud of

  • Winner of the EUvsVirus hackathon in the category “Finance, other”.
  • During the Hackathon and in the run-up to it, regions and cities showed initial interest in using the Impact Multiplier with potential use in the city of Barcelona and the regions of Liverpool, Normandy, Eastern Flanders, the Netherlands, Thessaly and some interest from regions in Italy.
  • Cyclos can be configured and customised for use by local governments within 4 weeks.
  • Cyclos is used by 14 banks to facilitate mobile wallets used by many millions of and micro businesses in Africa and Asia.
  • Fintech innovations like the hourglass-counter, a tool that calculates how long money should circulate between SMEs in the region before it can be used outside the payment environment.
  • Extensive civil society networks and outreach capacity to build up the networks required to take this off the ground.
  • We connected the Multiplier Impact system with the EU Solidarity Voucher Scheme to connect the business network B2B dimension with the B2C dimension of stimulating consumption.

What we did during the hackathon weekend

  • We brought together a powerful team of tech professionals, economists and civil society actors.
  • We got in touch during this hackathon with many brilliant and enthusiastic people pursuing all kinds of different projects. Amongst these, we learned of the initiative of the solidarity vouchers which could be combined seamlessly with the effort of the consortium of regions. The tool and the organisation of SMEs can be the same, while additional in the approach is the involvement of citizens to invest money in the future of vulnerable businesses in their community and in communities where they want to enjoy holidays in later years.
  • We formulated our project idea and refined it and honed the pitch.
  • We formulated our business plan, and defined concrete next steps in order to proceed.
  • We designed our website and video.
  • We started the cooperation with the project European Solidarity Vouchers for SMEs.
  • We started the parametrization of the Cyclos settings to operate the Impact Multiplier system in various regions.

What we learned

  • Many regions and cities are eager to become part of a European broad initiative to support the recovery of small companies.

What's next?

  • Extend the consortium and create a pan European network with partners in as many European countries as possible.
  • Create a program of training and support with the preparation of the impact multiplier.
  • Establish exchange of information with non-EU cities and regions that also want to use the Impact Multiplier.
  • Raise funds for the startup of one pilot in each EU Member State;
  • Create a forum for sharing of experiences, best practices etc. of the governmental consortium partners and the business associations involved to further improve the use of the Impact Multiplier.
  • Join forces with the European Solidarity Voucher Initiative and provide consumers the option to support SMEs using the Multiplier system with a special focus on businesses in the hospitality sector.
  • Develop a parallel approach for a program to deliver credits with no costs to SMEs in need. For this the countercyclical approach developed and tested by the Social TRade Organisation will be used. This brings clients to suppliers in need for clients by enabling credits for these clients.

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