Financing SMEs and Entrepreneurs

Frequency :
Annual
ISSN :
2306-5265 (online)
ISSN :
2306-5257 (print)
DOI :
10.1787/23065265
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Also available in: French
 
Financing SMEs and Entrepreneurs 2013

Financing SMEs and Entrepreneurs 2013

An OECD Scoreboard You do not have access to this content

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Author(s):
OECD
Publication Date :
23 Aug 2013
Pages :
282
ISBN :
9789264190481 (PDF) ; 9789264190467 (print)
DOI :
10.1787/fin_sme_ent-2013-en

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Access to finance represents one of the most significant challenges for entrepreneurs and for the creation, survival and growth of small businesses. As governments address this challenge, they are running up against a major and longstanding obstacle to policy making: insufficient evidence and data. Better data is needed to understand the financing needs of SMEs and entrepreneurs and to provide the basis for informed institutional and public policy decisions. The OECD Scoreboard on financing SMEs and entrepreneurs represents a major step in addressing this obstacle by establishing a comprehensive international framework for monitoring SMEs’ and entrepreneurs’ access to finance over time. The Scoreboard presents data for a number of debt, equity and financing framework condition indicators. Taken together, they provide governments and other stakeholders with a tool to understand SMEs’ financing needs, to support the design and evaluation of policy measures and to monitor the implications of financial reforms on SMEs’ access to finance.

This second edition comprises 25 countries, including Canada, Chile, the Czech Republic, Denmark, Finland, France, Hungary, Ireland, Italy, Korea, the Netherlands, New Zealand, Norway, Portugal, the Russian Federation, Serbia, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States. It includes an overview of SME financing trends and conditions across participating countries, focusing in particular on the changes which occurred between 2010 and 2011, and of government policy responses intended to improve SMEs’ access to finance. The second edition also includes a Reader's Guide, a thematic focus on Credit Guarantee Schemes and methodological Annexes.

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    Foreword

    As the global economy begins to turn the corner following the worst financial and economic crisis in decades, governments, businesses and individuals still face major challenges to prosperity. Small and medium-sized enterprises (SMEs) and entrepreneurs must continue to be key players in national strategies for growth, job creation and social cohesion. SMEs and entrepreneurs are crucial for tracing new paths to more sustainable and inclusive growth, thanks to their role in developing and diffusing innovation. However, they can only fulfill this potential if they obtain the finance necessary to start and grow their businesses.

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    Acronyms and Abbreviations
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    Reader's Guide: Indicators and Methodology

    This chapter outlines the methodology of the Scoreboard on SME and entrepreneurship finance and provides guidance for the interpretation of data in country profiles. It presents the core indicators selected to monitor debt and equity financing, SME solvency and government policy measures to support SMEs’ access to finance. The chapter discusses limitations to cross-country comparability and recommendations for the improvement of data collection.

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    Recent Trends in SME and Entrepreneurship Finance

    This chapter analyses trends in SME and entrepreneurship finance over 2007-11, based on data collected for the country Scoreboards and information from demand-side surveys. A short overview of the global business environment and economic prospects sets the framework for the analysis of SME financing trends and conditions, focusing in particular on the changes which occurred in participating countries between 2010 and 2011. These recent developments are compared with trends over the crisis and early recovery stages. The pre-crisis year 2007 serves as a benchmark. The chapter concludes with an outlook on 2012 emerging trends and an overview of government policy responses intended to improve SMEs’ access to finance.

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    Thematic Focus: Credit Guarantee Schemes

    This chapter provides an overview of Credit Guarantee Schemes in Scoreboard countries. The evidence on public schemes provided in the country profiles is complemented by information on private guarantee schemes as well as mixed guarantee schemes (public-private). The chapter sets this evidence within a conceptual framework, discussing the rationale of credit guarantee systems and illustrating the diversity of CGSs, in terms of ownership structure, funding, programme design and operational characteristics. It explores these dimensions in specific credit guarantee schemes in Scoreboard countries and reviews the main policy measures introduced during the crisis to support credit guarantee operations. The chapter then addresses structural and emerging challenges for the effectiveness and sustainability of these schemes. For this purpose, key dimensions for evaluation and performance indicators are examined. The chapter concludes with policy considerations.

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  • Expand / Collapse Hide / Show all Abstracts Country Profiles of SME Financing 2007-11

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      Canada

      In 2011 Canadian small businesses (1-99 employees) constituted 98.1 % of all businesses and employed 48.3 % of the private sector labour force. Among those employees, 76.3 % were employed in the services sector and 23.7 % in the goods sector.

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      Chile

      In Chile, 99 % of all enterprises are SMEs and they employ 57 % of the business sector labour force. 77 % of SMEs are microenterprises, 19 % are small and 3 % are medium-sized. Although the usual definition of an SME is based on the annual sales of the enterprise, the financial sector uses a definition based on the loan amount, as indicated in Box 4.2.

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      Czech Republic

      In 2011, 99.9 % of all enterprises were SMEs. 96 % of SMEs were micro firms and 4 % small and medium-sized enterprises.

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      Denmark

      SMEs accounted for 99.7 % of all enterprises in Denmark according to OECD statistics.

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      Finland

      In Finland, 99.5 % of all firms were SMEs (113 368 SMEs), and they employed approximately 60 % of the labour force in 2011. Almost 85 % of them were micro-enterprises with less than 10 employees.

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      France

      There are roughly 2.5 million SMEs (legal units) in France. They account for 99.8 % of all enterprises and employ 60.5 % of the labour force.

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      Hungary

      In 2010, 99.8 % of all employer enterprises in Hungary were SMEs and 94.2 % were micro enterprises.

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      Ireland

      SMEs comprised 99.6 % of all employer firms in 2010 and employed over 69 % of the labour force, whereas large enterprises comprised just 0.4 % but accounted for over 30 % of the employment.

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      Italy

      SMEs comprise 99.9 % of enterprises in Italy and account for 80 % of the industrial and service labour force. The sector has a relatively small-scale structure: the share of micro-enterprises is higher than the EU average, while the percentage of small and medium-sized firms is below average (Eurostat, 2011). Data collected from the debt side were mainly available for most of the firms with less than 20 employees, which represents nearly the entire universe.

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      Korea

      SMEs constituted 99.9 % of industrial enterprises and employed 86.8 % of the industrial labour force in 2010.

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      The Netherlands

      SMEs comprised 99.6 % of enterprises and employed 68 % of the labour force in 2010.

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      New Zealand

      As of February 2012, 99.5 % of New Zealand enterprises were classified as SMEs, counting enterprises with 0-99 employees. This proportion has stayed relatively stable since 2001.

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      Norway

      There was a total of 402 220 enterprises in Norway in 2009 and 35.4 % of these had between 1 and 249 employees. Of the enterprises with at least one employee, 81.1 % were microenterprises.

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      Portugal

      In 2008, SMEs comprised 99.7 % of enterprises in Portugal and employed 72.5 % of the business sector labour force. The vast majority of enterprises were SMEs, 86 % were micro-enterprises, 12 % were small and 2 % were medium-sized.

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      Russian Federation

      The Russian Federation does not use the EU definition of an SME (see Box 4.7). The Russian State Statistics Service undertook a complete statistical census of actually operating SMEs in 2011. Included were individual entrepreneurs and those micro, small and medium enterprises which were legal entities or officially registered. If both legal and non-legal entities were included, there were 4.6 million SMEs in the Russian Federation in 2011 vs. 3.2 million legal operating entities. However, according to the State Tax Administration there were 5.9 million registered SMEs in 2011. The difference between the two figures 4.6 million and 5.9 million is explained by the fact that some SMEs register in one area and operate in another area and such SMEs were not counted in the survey undertaken by the Russian State Statistics Service. The State Tax Administration provided the following breakdown of registered firms.

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      Serbia

      Serbia does not use the standard EU definition for an SME (see Box 4.8). 99.8 % of all Serbian enterprises are SMEs and employ over 66 % of the labour force.

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      Slovak Republic

      SMEs dominate the Slovak economy. In 2011 out of the total number of enterprises there were only 613 enterprises with a turnover of more than EUR 50 million. The number of enterprises in the small category declined as they shifted to the micro category. There were 556 401 supposed SMEs of which 133 728 had between 1 and 249 employees.

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      Slovenia

      In 2011, 99.5 % of all firms in Slovenia were SMEs.

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      Spain

      In Spain, 99.8 % of all enterprises were SMEs in 2010. They employed 67 % of the business labour force. 89 % were microenterprises, 9.2 % were small and 1.4 % were medium sized.

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      Sweden

      SMEs with employees constituted 26 % of all enterprises and employed 63.8 % of the labour force in 2010. Thus, the vast majority of enterprises (73.9 %) had no employees. Table 4.84 illustrates the distribution of employer firms. Of these, 99.6 % had less than 250 employees.

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      Switzerland

      SMEs, defined as firms with up to 250 employees, constituted 99.6 % of Swiss enterprises and employed 66.6 % of the labour force in 2008.

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      Thailand

      There were 2.9 million SMEs (firms with less than 200 employees) in Thailand in 2010, constituting 99.6 % of all enterprises and employed 78 % of the labour force including agriculture. The economy of Thailand was hit by two major events during the period under study: political instability and the financial crisis originating in the West. In Studies on SME and Entrepreneurship: Thailand. Key Issues and Policies (2011), the OECD found that less than half of the 2.9 million SMEs can access formal finance. This problem was compounded in Thailand by systemic volatility in financial markets. The Asian financial crisis and the recent global financial crisis have made it difficult for Thai banks to accept risky loans, not least because they were often burdened with extremely high non-performing loan rates. The lesson learned from the Asian crisis in 1997 was that adequate capital alone cannot encourage bank lending. Banks will only lend when they are comfortable with the level of credit risk.

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      Turkey

      In Turkey an enterprise is a legal unit or combination of legal units. The definition of an SME (see Box 4.12) does not completely correspond to the EU definition. As illustrated in Table 4.96, micro-enterprises accounted for more than 98 % of all firms in 2009; they employed about 40 % of the labour force and accounted for 60 % of exports.

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      United Kingdom

      There were over 4.5 million enterprises in the United Kingdom in 2011. Of these 74.1 % had no employees but only an owner/manager. The remaining SMEs with one employee or more were distributed as follows in Table 4.103. Of these enterprises, 82.6 % were small enterprises and had less than 10 employees.

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      United States

      The United States Small Business Administration (USSBA) broadly classifies small businesses as any firm with 500 or fewer employees (see Box 4.14). These firms account for more than 26 million businesses, or 99 per cent of all firms. They employ slightly over half of the private sector’s employees, pay about 44 per cent of the total private sector payroll, generate about 65 per cent of net new private sector jobs, and create more than half of the nonfarm private Gross Domestic Product.

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  • Expand / Collapse Hide / Show all Abstracts Annexes

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      Methodology for Producing the National Scoreboards

      Financing SMEs and Entrepreneurs – An OECD Scoreboard provides a framework to monitor trends in SMEs’ and entrepreneurs’ access to finance – at the country level and internationally – and a tool to support the formulation and evaluation of policies.

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      Standardised Table for SME Finance Data Collection
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      Standardised Format for Reporting Government Policy Programmes

      The standardised format for reporting government policy programmes (Table C.1) aims to harmonise information and support policy makers to monitor change in programmes’ terms, outcomes, and effectiveness. The consistency and continuity of reporting over time is crucial to the assessment. Often, changes in programmes’ parameters influence outcomes, such as uptake and costs, with a time lag. The format allows for systematic and time-consistent reporting without increasing the reporting burden. Once the information on a specific programme is entered, it can be updated a on regular basis. When the programme changes, the information sheet would track the year of the change and the parameter(s) affected.

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      Surveys and Statistical Resources on SME and Entrepreneurship Finance

      Surveys represent an important source of information and data for monitoring the state of financing available and used by SMEs and entrepreneurs, as well as for assessing appropriateness and effectiveness of government policies in this area. A large number of supply-side and demand-side surveys are conducted at the national level by government agencies, national statistical offices, central banks and, in some cases, business associations and private organisations.

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      Example of a Simplified Quantitative Demand-side Survey
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