SMEs’ Access to Finance

Starting a business and expanding its activities require money, and raising the right kind of finance is still a major difficulty for European SMEs because Europe lacks both financial instruments and a supporting environment to let companies grow. Enlarging possibilities of finance for SMEs is and will remain a key element in the future to turn Europe into the most competitive and dynamic knowledge-based economy in the world.

Fully exploiting the European entrepreneurial potential requires good access to finance. Many small and medium-sized enterprises consistently consider access to finance to be a problem.

Overall, 75% of the Europeans consider it difficult to start their own business due to a lack of available financial support.

This relates to equity as well as access to debt financing. In spite of the growing importance of alternative sources of debt financing, the majority of European SMEs still depend on banks and this is not expected to change in the near future. Moreover, SMEs have a competitive disadvantage to big companies as regards the costs of financing.

For entrepreneurship to flourish in Europe, policymakers must rapidly undertake actions in the following fields:

• Fostering the expansion of micro-credit across the EU;
• Enhanced usage of JEREMIE & JEREMIE like instruments;
• Speeding up action to facilitate the creation of a truly European venture capital market;
• Speeding up the development of mutual guarantee societies.