PURPOSE: to propose an action plan to improve access
to finance for SMEs.
BACKGROUND: Europe's economic success depends largely
on the growth of Small and Medium sized Enterprises (SMEs)
achieving their potential. SMEs contribute more than half of the
total value added in the non-financial business economy and
provided 80% of all new jobs in Europe in the past five
years.
SMEs often face significant difficulties in obtaining
the financing they need in order to grow and innovate. One of the
key priorities set out in Europe 2020, the EU's growth strategy for
the coming decade, as well as in the Commission's Single Market Act and the
Small Business Act is to
facilitate access to finance for SMEs.
The Annual Growth Survey has underlined the
crucial role of a healthy financial system to support growth and
set out priorities for action in the short-term perspective. In
this context, the reform programme for financial services,
implemented as a response to the financial crisis, can bring about
regulatory benefits to SMEs. In addition, the Commission is
proposing to release new targeted funding at EU level to address
the key market failures that limit the growth of SMEs. The
Commission is presenting in this Action Plan the various policies
that it is pursuing to make access to finance easier for
Europe's 23 million SMEs and to provide a significant
contribution to growth.
CONTENT: difficulties in accessing finance are one of
the main obstacles obstructing the growth of SMEs. There are
multiple causes for such obstacles, some cyclical, some structural.
Information asymmetries between the suppliers and demanders of
funds play a major role.
SMEs are to a very large extent dependent on bank
loans for their external financing, therefore suitable alternatives
should be put at their disposal.
To respond to these challenges, the Commission has
opted for a three-fold approach:
- the Commission will use regulation to make SMEs
more visible to investors and markets more attractive and
accessible for SMEs. Regulatory changes will keep the right balance
between prudential regulation and financing of SMEs, and between
investor protection and tailored measures for SMEs.
- the Commission intends to continue using the EU
budget to facilitate access to finance for SMEs to address the
key market failures (i.e. information asymmetries and fragmentation
of venture capital market) that limit the growth of SMEs. EU
intervention must have a clear added value complementing financial
resources available at national level and mobilise additional
finance (presence of a "financial multiplier effect").
- the Commission will use its coordinating role,
working in particular with Member States, to exchange best
practices and develop synergies between actions taken at the
national and EU levels.
Current and future budget: the financial instruments of the Competitiveness and
Innovation Framework Programme (CIP) with a budget of €1.1
billion should enable financial institutions to provide about
€30 billion of new finance for more than 315 000 SMEs.
In 2008-2011, the European Investment Bank (EIB) provided around
€40 billion of lending for SMEs, which benefitted more than
210 000 SMEs.
In the field of Cohesion Policy the Commission already
adopted measures to provide investments for SMEs in 15 Member
States through financial engineering instruments designed by
structural funds. Assistance to enterprises provided through equity
investments, guarantees and loans is estimated to amount to at
least €3 billion in the current financial period.
Lastly, 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. 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.
Regulatory measures: the
following measures are proposed:
- present a new EU venture capital framework
creating a genuine internal market for VC funds. The Commission
invites the Parliament and the Council to adopt this legislative
proposal by June 2012;
- in 2012, as part of a wider reflection on long-term
investment, on the basis of technical work to be jointly done by
the European Banking Authority and the European Insurance and
Occupational Pensions Authority, the Commission will carry out a
study on the relationship between prudential regulation and venture
capital investments by banks and insurance companies;
- complete its examination of the tax obstacles to
cross-border venture capital investment with a view to presenting
solutions in 2013 aimed at eliminating the obstacles while at the
same time preventing tax avoidance and evasion;
- review, by 2013, the General Block Exemption
Regulation and a number of State aid guidelines, including on Risk
Capital, to achieve Europe 2020 objectives and respond to SME
needs;
- adopt as swiftly as possible, the proposal on an SME
growth market label in EU capital markets legislation (MIFID);
- put in place by the end of 2012, with the assistance
of ESMA, a single access point to regulated information at EU
level. The Commission will facilitate access to high quality
information on listed SMEs;
on an accounting level:
(i) adoption of a legislative proposal amending
the Accounting Directives in order to simplify and improve
accounting rules for SMEs; (ii) revision of the Transparency
Directive in order to reduce the regulatory burden for small
issuers; (iii) propose, by July 2012, delegated acts in the context
of the Prospectus Directive,
specifying the content of a proportionate disclosure regime for
SMEs and small issuers;
- consider appropriate measures addressing the issue of
SMEs risk weighting in the context of the CRD IV and CRR (credit
risk rating) framework;
- encourage Member States to accelerate the
implementation of the Late Payments Directive in
advance in respect of the transposition deadline of March
2013;
- present a new European Social Entrepreneurship
Funds regime that will enable EU funds to
specialise in this field and to be marketed across the EU under a
specific and distinctive label. The Commission invites the EP and
Council to adopt this new regulation before the end of
2012.
Financial measures: the
Commission proposes a certain number of new financial instruments
to facilitate, including long-term (2014-2020), access to finance
for SMEs:
- a reinforced and expanded EU Debt Financial
Instrument to improve lending to SMEs, including R&I-driven
SMEs. The Instrument encompasses a Loan Guarantee Facility under
the COSME Programme (2014-2020)
and an SME Window under Horizon 2020's Debt
facility;
- the EU Debt Financial Instrument will also include a
Cultural and Creative Sectors Facility financed under the
Creative Europe Programme
(2014-2020), to enhance access to finance for SMEs in the European
cultural and creative sectors;
- under the EU Programme for Social Change and
Innovation (2014-2020), a specific Microfinance and Social
Entrepreneurship Axis that will support notably microfinance for
micro-enterprises, the build up the institutional capacity of
microcredit providers and financing for the development of social
enterprises;
- the European Investment Bank will maintain its SME
loan activity at a sustained pace close to the 2011 level, subject
to market conditions and in line with its funding capacity. The
EIB will continue to contribute to improving loan
conditions, increasing flexibility and ensuring rapid allocation.
EIB and EIF will continue developing synergies through risk-sharing
operations;
- a reinforced and expanded equity financial instrument
to improve SMEs' access to venture capital and other risk
financing, from their early stage (including seed) to their growth
stage. The equity financial instrument will be funded by the
Programme for the Competitiveness of Enterprises and SMEs and by
Horizon 2020;
- the establishment of funds-of-funds, within the
EU Equity Financial Instrument, to provide capital to venture
capital funds that target notably investments in more than one
Member State. National public financial institutions, as well as
private investors, will be invited to participate in the
fund;
- the EIB Group will continue supporting the growth of
SMEs through its wide range of equity products and particularly the
enlarged EIB Risk Capital Mandate.
Coordination measures:
to better inform SMEs, the Commission proposes to:
- reinforce the financial advisory capacity of the
Enterprise Europe Network in order to provide SMEs with
better information about the different sources of finance by
complementing existing national information structures;
- ensure that all the information on EU finance will be
pooled and made available through a single, multilingual online
portal covering the different sources of EU finance available
for SMEs;
- banks and other financial intermediaries have declared
that they will promote actions among their members to reinforce
information about EU financial instruments and public grants to
SMEs;
- work together with bank federations and will take
advice from other concerned institutions (ECB, EBA) to reinforce
the analytical framework for SME lending striving for better
comparison and more coherent methodology;
- promote the exchange of good practice and
encourages the banking sector and SME federations to promote the
use of qualitative rating as a tool to complement the standard
quantitative assessment of SMEs’ creditworthiness;
- further encourage co-investments with business angels
in different forms in co-operation with the EIF and Member States
within the possibilities under Structural Funds;
- further develop cross-border matching between
enterprises and investors, in particular business
angels;
- improve the matching of offers and requests for
venture capital within the Enterprise Europe Network;
- encourage stakeholders and stock exchanges in
particular to increase their information to SMEs about the
advantages of a market listing and how to go public;
- promote the establishment of an independent
institute to promote analyses and research on listed
medium-sized enterprises thereby increasing investors' interest in
this segment;
- encourage Member States and stakeholder associations
to establish national SME Finance fora to provide solutions for an
improved access to finance;
- encourage Banks, other financial institutions and SME
federations to establish national codes of conducts and guidelines
to improve transparency in the lending process and, if appropriate,
support credit mediator functions;
- take regulatory action to encourage responsible and
transparent lending to SMEs.