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European Commission


Brussels, 14 November 2013

Joint Commission/ECB report: Access to finance and finding customers the most pressing problems for SMEs

Access to finance is a key determinant for business start-up, development and growth for Small and Medium sized enterprises (SMEs) and they have very different needs and face different challenges with regard to financing compared to large businesses. The latter have ready access to equity capital markets, which are not accessible to the vast majority of small businesses. The lack of equity capital invested in small firms makes these businesses more reliant on other sources such as bank lending and other types of financial products.

The current economic environment has brought SME needs into particular focus given the significantly tightened credit supply conditions arising from the reduced ability and willingness of banks to provide the financing on which this sector is particularly reliant.

The EC and the European Central Bank (ECB) decided in 2008 to establish the Survey on the Access to Finance of Small and Medium-sized Enterprises (SAFE). The survey, conducted across 37 countries, including the 28 European Union (EU) and 17 euro area countries was undertaken in June-July 2009, in August-October 2011 and most recently in August-October 2013.

In detail, the survey examines SMEs’:

  • Financial situation, growth (past and future), innovative activities and need for external financing

  • Use of internal funds and external sources of finance

  • Experiences when applying for different types of external financing

  • Use of loans, the size and reasons behind taking out specific loans

  • Views about the extent to which different types of financing are available to them

  • Expectations about future financing with banks and other sources of finance

This memo gives a summary of some selected important conclusion. The full report is also available (see link at the end of text).

1. Access to finance – Differences in Member States

SMEs perceived difficulty to access to finance differently from 40% of SMEs in Cyprus, 32% in Greece, 23% in Spain and Croatia, 22% in Slovenia, 20% in Ireland, Italy and the Netherlands to just 7% in Austria or 8% in Germany and 9% in Poland.

In Cyprus, there was a significant increase in 2013 (40%) compared to what the SME managers reported in 2009 and 2011(both 14%). Greece had the second highest percentage of SME managers reporting access to finance (32%) as the most pressing problem, which stayed rather similar to the 2011 level (30%) with no statistically significant difference between the two years.

Cyprus (40%), Greece (32%) and Croatia (23%) were the three countries that reported access to finance as the most pressing problem amongst the pre-supplied list of 8 potential problems. While Spain ranked third compared to the rest of EU in terms of highest percentage of SMEs reporting access to finance, within Spain, access to finance (23%) ranked second after finding customers (27%).

2. Companies’ most pressing problem: finding customers

Finding customers remained as the most frequently cited problem by SMEs across the EU, although there was a slight decline in the frequency in 2013 (22%) compared to 2011 (24%) followed by access to finance. Availability of skilled staff or experienced managers ranked three and remained stable compared to 2011. Regulation ranked fourth in the list of most pressing problems (14%) and showed a significant increase compared to 2011 (5%).

Table: The most pressing problems SMEs reported

3. Use of different sources of financing: External or internal

54% of SMES looked for external financing only, slightly lower than in 2011 (56%). A further 22% of SMEs used both internal and external sources of funding, while only a few (4%) have used only internal funding sources. One in five (20%) had not used any source of financing in the past six months, the same level as seen in 2011.

Financing structure: use of internal funds and external financing

The highest levels of relying on internal funds only were in Austria, Hungary and Slovakia (8%+, i.e. twice the EU average). Avoidance of usage of any form of financing was especially high among SMEs in Romania, Latvia and Portugal (36%-42%, i.e. almost twice the EU average of 20%). Avoidance was also high outside the EU in Montenegro and Albania.

Avoidance of any use of financing was highest among the smallest EU SMEs, rising to 28% among those with 1-9 employees compared to just 11% among the biggest SMEs with 50-249 employees. Internal financing did not make up much of the difference, although it was slightly higher (5%) among the smallest SMEs than those with 10+ employees (3%).

A similar pattern was also seen by turnover with SMEs of euro 2 million or less being the most likely to manage without financing (23%) compared with the biggest (11% of those with a turnover of more than euro 50 million -).

Industrial SMEs were least likely to have managed without any form of financing over the last six months (14%) and service providers the most likely (22%).

4. Sources of financing: Bank overdrafts, leasing, trade credit and bank loans

Internal funds were used as one of (or only) the sources of financing by 26% of EU SMEs in the previous six months. This is only slightly above 2011 levels (24% for the EU 27).

Many other sources of financing continue to be widely used, as in 2011, in particular, bank overdrafts (39%, comparable to the 2011 level of 40%). Close behind were leasing/hire purchase/factoring (35%, very close to 2011 level of 36%), trade credit (32%, the same as 2011 levels) and bank loans (32%, very close to 2011 level of 30%).

About one in seven (15%) SMEs used other loans from related companies, shareholders, family or friends. One in eight (13%) had used grants or subsidised bank loans. 5% had used equity and a few had used subordinated loans (2%) and debt securities issued (2%).

Levels of use of other sources of finance were similar to 2011 levels with only a small increase in the level of bank loans (up from 30% in 2011 to 32% in 2013), retained earnings (also up 2% from 2011) and other loans (up 2% from 2011). Use of equity was slightly lower, down 2% from 2011.

Table: Companies’ use of internal and external financing in the past six months

5. External sources – Differences between Member States

Overall 75% of EU SMEs used at least one form of debt financing in the past six months. This is the same level as seen in 2011. There has been a marked increase in debt financing since 2011 in Greece, from 57% to 74% in 2013, bringing it into line with the EU average, and also in Italy, rising from 76% to 82%.Levels have dropped a little in some countries but big falls were seen in Estonia (from 85% to 62%) and Romania (from 78% to only 55%), followed by Latvia (from 71% to 53%).

Table: Companies that had used debt financing in the past six months

Of the EU countries, SMEs in Ireland remain the most likely to have used debt financing in the last six months (85%). Debt financing was also relatively common in the UK (85%, now matching levels in Ireland), Italy (82%), Malta (81%) and Finland (81%). It was least used in Hungary (59%), Romania (55%) and Latvia (53%) after a big drop in levels used since 2011 in all three countries.

Debt financing was relatively less common among the smallest SMEs (67% of those with 1-9 employees compared to 80% or more where there were at least 10 employees) and those with the lowest turnover (72% of those with euro 2 million or less compared with 84% for all SMES with bigger turnovers). It was also less common among the newest SMEs (60% if they were less than two years old) and those with only one owner (69% for a male owner and 63% for women owners).

6. Companies that had used equity financing in the past six months

Only 5% of EU SMEs had used equity financing in the last six months. It was nearly twice as common among larger businesses (9% of those with 250+ employees) in the EU.

Equity financing was far and away most common among SMEs in Lithuania (45%) and had even increased since 2011 levels (38%). Well behind this level but clearly above average levels were seen in Latvia (16%), Sweden (12%) and Finland (10%). It was very little used though in Hungary, Estonia, Croatia and Portugal (all 1% or less). Levels have changed little since 2011 in most EU countries except Lithuania (up) and a considerable drop in Denmark (from 46% to 9%) and Sweden (from 31% to 12% in 2013).

Company characteristics – equity financing

Equity financing was more likely among larger SMEs (rising from 4% among those with only 1-9 employees to 7.5% among those with 50-249 employees) and those with the highest revenue levels (11% for SMEs with more than euro 50 million). It was also more likely among SMEs that have been established for at least 10 years (9%) and SMEs in the trade sector (15%). Not surprisingly it was most common among SMEs partly owned by venture capital or business angels (21%).


This survey was requested by the Directorate General for Enterprise and Industry of the European Commission, in cooperation with the European Central Bank.

More information

Report on the Access to Finance of Small and Medium-sized Enterprises (SAFE) in 2013.

EU Access to Finance internet portal

Interview with VP Tajani: "COSME to spur access to credit for small enterprises"

COM-EIB SME initiative endorsed by the European Council in October

Green paper on long term financing

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