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Brussels, 7 December 2011
EU Action Plan: helping SMEs access more financial resources
The EU Action Plan to improve access to finance for SMEs presents the various EU policies and measures to make access to finance easier for Europe's 23 million SMEs. It covers actions to improve the venture capital market and facilitate access to financial resources. It contains also financial products to ease access to bank lending, for an amount of at least € 20 billion allocated to SMEs from the new Multiannual Financial Framework. A new survey published today shows that difficult access to finance is among the top concerns (15%) of SMEs. Almost two-thirds (63%) of the EU SMEs who applied for a bank loan during the last six months received the whole amount they asked for. However, 11% of the applications were rejected and 17% received less than they applied for. In addition 4% declined the loan offer from the bank because they found the conditions unacceptable. So about one third of the SMEs did not get the finance they had planned for (for more details see below).
Proposed actions to improve access to finance
Proposed regulatory measures to improve access to finance
Current EU Financial instruments for SMEs
The financial instruments (loan guarantees and venture capital) of the Competitiveness and Innovation Framework Programme (CIP) with a budget of €1.1billion will enable financial institutions to provide about €30 billion of new finance for more than 315 000 SMEs.
The SME guarantee facility (SMEG) provides guarantees to encourage financial institutions to make more debt finance available to SMEs by reducing their exposure to risk. SMEG provides co-, counter- and direct guarantees to financial intermediaries providing loans and mezzanine finance to SMEs. This will help SMEs with limited or no collateral to obtain loans. 90% of the beneficiaries have 10 or less employees and this is the category that has most difficulties to get a loan. The average guaranteed loan is about €65 000.
The high growth and innovative SME facility (GIF) contributes to the establishment and financing of SMEs. GIF provides risk capital – usually in the order of millions of euros – for innovative SMEs in their early stages and risk capital for SMEs with high growth potential in their expansion phase.
The CIP financial instruments are managed by the European Investment Fund through national and regional financial intermediaries (banks and venture capital funds) in the Member States of the European Union. A list of the CIP financial intermediaries by country can be found at: www.access2finance.eu
In 2008-2011, the European Investment Bank (EIB) provided around €40 billion of lending for SMEs, which benefitted more than 210 000 SMEs. In 2009, the EIF launched the €1 billion Mezzanine Facility for Growth to be invested in hybrid debt /equity funds throughout Europe, for high growth SMEs and midcaps, with a view to playing a catalytic role in this market segment. In 2011 the EIB group has increased its Risk Capital Mandate to €5 billion and extended the scope to include co-investing with business angels.
In the field of Cohesion Policy, the Commission has adopted measures to provide assistance to enterprises through equity investments, guarantees and loans under structural funds. In the current financial period the measures are estimated to amount to at least €3 billion.
In order to provide better access to loan finance a specific Risk Sharing Instrument (RSI) is being created under the EU's Seventh Framework Programme for Research (FP7) Risk-Sharing Finance Facility as of 2012. It is expected to unlock a further €6 billion of loans until the end of 2013, including up to €1.2 billion for SMEs and up to €300 million for research infrastructures. The RSI will provide partial guarantees to financial intermediaries through a risk-sharing mechanism, thus reducing their financial risks encouraging them to provide lending between €25 000 and €7.5 million to SMEs undertaking research, development or innovation activities. (IP/11/1505)
A pilot scheme concerning loan guarantees to research - and innovation-driven enterprises – the Risk Sharing Instrument – will start in January 2012.
One third of the SMEs did not get the finance they had planned for
In general, the SME respondents in Europe consider that the conditions of bank financing worsened during the previous 6 months of 2011 in terms of the interest rate and other costs, collateral and required guarantees. However the most pressing problem continues to be finding customers (24%).
Forms of financing used by SMEs
30% of companies are using bank loans and 40% are using bank credit line or overdraft facilities. Bank loans are also the most widely preferred external financing solution to realise firms' growth ambitions (63%).
Generally it is the larger (both in terms of staff and turnover) and older enterprises that are more likely to get the external finance that they request.
Younger and smaller firms are more likely to get only some of the finance they requested, and, indeed, to be rejected outright. The highest rejection rate was among the micro companies employing less than 10 people (16%) and among SMEs active between 2 and 5 years (24%).
Regarding equity financing, it was used by 7% of the SMEs and the main challenge concerning this source of financing is the lack of investment readiness or financial knowledge.
The survey was developed together by the European Commission and the European Central Bank. A joint survey, published today, is conducted every two years.
The survey on the access to finance of SMEs was conducted between 22 August 2011 and 7 October 2011 covering a sample of more than 15,000 firms across a total of 38 countries - the European Union, the European Free Trade Association as well as other countries participating in the Entrepreneurship and Innovation Programme. The report provide information on the financial situation, financing needs, access to financing and expectations of SMEs, compared with large firms, in the six preceding months. The full report is available at: