Financing SMEs and Entrepreneurs

English
Frequency
Annual
ISSN: 
2306-5265 (online)
ISSN: 
2306-5257 (print)
DOI: 
10.1787/23065265
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Published annually, this report documents the financing difficulties of SMES and entrepreneurs and monitors trends in 31 countries, along with government policy responses to deal with these challenges.

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Financing SMEs and Entrepreneurs 2016

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Financing SMEs and Entrepreneurs 2016

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Author(s):
OECD
14 Apr 2016
Pages:
580
ISBN:
9789264249486 (PDF) ; 9789264255234 (EPUB) ;9789264249462(print)
DOI: 
10.1787/fin_sme_ent-2016-en

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This report monitors SME and entrepreneur access to finance in 37 countries. It includes indicators of debt, equity, asset-based finance and framework conditions for SME and entrepreneurship finance, complemented by an overview of recent developments in public and private initiatives to support SME finance. Taken together, these indicators form a comprehensive framework for policy makers and other stakeholders to evaluate the financing needs of SMEs.

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  • Foreword

    As governments around the world continue to grapple with uncertain economic prospects and important social challenges, they are looking to small and medium-sized enterprises (SMEs) and entrepreneurs as an important source of economic growth and social cohesion. Appropriate access to finance is a critical prerequisite to enable these businesses to invest, grow and create jobs, and the issue has been climbing steadily up the policy agenda in recent years. But effective policy responses for SME finance require coherent and meaningful evidence.

  • Reader's Guide

    The OECD Scoreboard on SME and entrepreneurship finance provides a comprehensive framework for monitoring SMEs’ and entrepreneurs’ access to finance over time. The country profiles present data for a number of core indicators, which measure trends in SME debt and equity financing, solvency and policy measures by governments. Taken together, the set of indicators provide policy makers and other stakeholders with a consistent framework to evaluate whether SME financing needs are being met, to support the design and evaluation of policy measures, and to monitor the implications of financial reforms on SMEs’ access to finance.

  • Acronyms and abbreviations
  • Executive summary

    Financing SMEs and Entrepreneurs 2016 monitors SMEs’ and entrepreneurs’ access to finance in 37 countries over the period 2007-14, with the pre-crisis year 2007 serving as a benchmark. Based on data collected for the country profiles and information from demand-side surveys, this report includes indicators of debt, equity, asset-based finance and framework conditions for SME and entrepreneurship finance, complemented by further sources of information and recent public and private initiatives to support SME finance. Taken together, these indicators form a comprehensive framework for policy makers and other stakeholders to evaluate the financing needs of SMEs and determine whether they are being met. This report also constitutes a valuable tool to support the design and evaluation of policy measures, and to monitor the implications of financial reforms on access to finance and financing conditions for SMEs.

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  • Expand / Collapse Hide / Show all Abstracts SME financing: State of play

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    • Recent trends in SME and entrepreneurship finance

      This chapter analyses trends in SME and entrepreneurship finance over 2007-14, based on data collected for the country scoreboards and information from demand-side surveys. A short overview of the global business environment sets the framework for the analysis of SME financing trends and conditions, focusing in particular on the changes which occurred in participating countries between 2013 and 2014. These recent developments are compared with trends during the 2008-09 crisis and early recovery stages. The pre-crisis year 2007 serves as a benchmark. The chapter concludes with an overview of government policy responses put in place to improve SMEs’ access to finance in light of recent developments.

    • The role of business angel investments in SME finance

      This chapter examines the role of business angel investments as a source of finance for SMEs and entrepreneurs, emerging trends in the market and recent policy developments to stimulate angel activities. The chapter also collects and analyses the coverage and comparability of available data on business angel investments, with a look to strengthen evidence-based policy making in this area.

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  • Expand / Collapse Hide / Show all Abstracts OECD country and partner economy profiles of SME and entrepreneurship financing 2007-14

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    • Australia

      Small and medium sized enterprises (SMEs) account for 99.8% of all enterprises in Australia, according to Australia’s national statistics agency, the Australian Bureau of Statistics (ABS). In 2013-14, there were 2 096 548 SMEs in Australia.

    • Austria

      In 2013, 99.7% of all firms were SMEs and they employed approximately 67% of the labour force.

    • Belgium

      In 2013, SMEs in Belgium constituted 99.9% of total firms, the majority of which were micro-enterprises (94.3%). Only 0.1% were large enterprises.

    • Canada

      In 2014 Canadian small businesses (1-99 employees) constituted 98% of all businesses and employed 7.6 million individuals, which translates into 66.3% of the private sector labour force. Among those individuals, 75% were employed in the services sector and 25% in the goods sector (see ).

    • Chile

      In Chile, SMEs account for the overwhelming majority of the total number of enterprises. In the commercial year 2014, 98.5% of the firms were classified as SMEs, including employer and non-employer firms in all industries. Microenterprises made up 75% of the total number of firms; whereas small and medium ones accounted for 20.7% and 3.1% of the total, respectively. Although SMEs represent almost all of the enterprises, they only account for about 16% of total annual sales. Likewise, according to the statistics of the Internal Revenue Service (Servicio de Impuestos Internos, SII), SMEs accounted for 45% of the payroll of Chilean firms in the commercial year 2014.

    • China (People's Republic of)

      In China, micro, small and medium enterprises (SMEs) comprise 97% of all firms, accounting for 80% of urban employment, and for 60% of total GDP in 2013. In 2013, there were about 11.7 million small and micro enterprises and about 44.4 million self-employed entrepreneurs; accounting for 94.2% of all firms. 60.2% of small businesses (excluding self-employed) operate in the services sector (with 36.5% in wholesale, retail and catering; 10.2% in tenancy and business services; 2.5% in information transmission services; 2.5% in real estate industries; and 8.5% in other service industries). In addition, 18.5 of small businesses operate in manufacturing and processing, 5% in construction, and 3.2% in agriculture-related industries.

    • Colombia

      In Colombia, microenterprises and SMEs (MSMEs) represent an important part of the economy. The latest 2005 census records of the National Bureau of Statistics indicate that SMEs are employing 80.8% of the country’s workforceEconomic Census of 2005, National Bureau of Statistics (DANE). and contributing to 40% of GDPThe participation of MSMEs in the GDP is inferred from an estimate of the Association of Micro and Small Entrepreneurs (ACOPI).. However, there exist large differences within the MSME sector, particularly between medium-sized firms, on the one hand, and micro and small enterprises on the other. Moreover, informality is common and formalisation is constrained by the family nature of businesses, which are typically limited in their managerial capacity and corporate governance.

    • Czech Republic

      There are roughly 1.1 million active enterprises in the Czech Republic, most of them SMEs with less than 250 employees (99.84% of all enterprises as of 2014), employing almost 1.78 million people (59.4 % of Czech Republic’s workforce). The bulk of them are micro firms, covering 92.7% of SMEs.

    • Denmark

      SMEs accounted for 99.4% of all enterprises in Denmark according to Statistics Denmark.

    • Estonia

      Of all Estonian firms in 2013, only 0.2% were large enterprises, employing more than 250 staff. SMEs employed 79.3% of the workforce and accounted for 75.8% of the value added. 90.4% of all firms were micro-enterprises, i.e. firms with less than 10 employees, employing 31.5% of the workforce and accounting for 25.6% of the value added in 2013.

    • Finland

      In Finland, 99.4% of all firms were SMEs in 2013 (90 486 SMEs), employing 64.6% of the labour force. The vast majority of them (79.3%) were micro-enterprises with less than 10 employees, employing 25.5% of the country’s total workforce.

    • France

      There are roughly 2.5 million SMEs (legal units) in France. They account for 99.8% of all enterprises, excluding approximately 0.5 million of non-employer enterprises.

    • Georgia

      In 2013, more than 99% of all firms in Georgia were SMEs, accounting for 42.7% of total private employment. The low share of employment generated illustrates that the economy in Georgia is strongly dependent on large enterprises and that SMEs play a relatively minor role in the economy. Moreover, SMEs contributed to only 20.6% of private sector value added in 2013, indicating that labour productivity in small and medium-sized enterprises is significantly trailing behind productivity in large firms.

    • Greece

      99.9% of Greek enterprises are defined as SMEs, according to a demand-side survey of The Hellenic Confederation of Professionals, Craftsmen & Merchants (GSEVEE), corresponding to a total number of 531 059 SMEs. 96.7% of them (513 780) are defined as Very Small Enterprises, 2.8% (14 978) are defined as small Enterprises, only 0.4% (2 301) as medium-sized Enterprises and only 0.1% (378) as large enterprises. More than half of the workforce is employed by micro-enterprises and 84.8% by SMEs, accounting for 34.6% and 69.0%, respectively, of the value added in the economy. Compared with the EU-27 average, SMEs and especially micro-enterprises are more numerous and more important to the Greek economy (see ).According to the European Union standard definition (2003/361/EC), SMEs are firms with less than 250 employees and annual turnover below EUR 50 million and/or balance sheet below EUR 43 million. A small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million. Within the SME category, a microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

    • Hungary

      Hungary defines SMEs using the standard criteria provided by the European Union. An SME is an enterprise with fewer than 250 employees and an annual turnover not exceeding EUR 50 million. (The definition is stipulated in Law No. XXXIV of 2004 on the Small and medium–sized enterprises and on the support of their development.)

    • Ireland

      SMEs comprised 99.6% of all employer firms in 2012 and employed approximately 68% of the labour force, whereas large enterprises comprised only 0.4% of the labour force, but accounted for approximately 32% of employment.

    • Israel

      The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West bank under the terms of international law.

    • Italy

      SMEs represent 99.9% of enterprises in Italy and account for 80% of the industrial and service labour force (Eurostat, 2011). The share of micro-enterprises is higher than the EU across all sectors.

    • Japan

      Only a very small fraction of Japanese enterprises are large (see ). Within the SME sector, micro-enterprises predominate, both in the number of firms and the number of employees.

    • Korea

      SMEs constituted 99.9% of Korean enterprises in 2013, with the vast majority being micro enterprises employing up to 9 employees (93.2% of employer enterprises). Small and medium enterprises accounted for another 6.7% of all employer enterprises. Large enterprises with more than 250 employees constitute only 0.1% of all employer enterprises.

    • Malaysia

      Small and medium enterprises (SMEs) have long been recognised as the backbone of the Malaysian economy, as they outnumber the large enterprises, both in terms of number and employment. According to the latest 2011 Economic Census, SMEs account for 97.3% or 645 136 of total business establishments. The majority of SMEs operate in the services sector (90%), followed by manufacturing (6%), construction (3%), agriculture (1%) and the remaining 0.1% are found in the mining and quarrying sector. In 2014, SMEs contributed close to 36% of the country’s gross domestic product (GDP), to 65% of total employment, and to 17.8% of total exports.

    • Mexico

      There were approximately 5.6 million SMEs in Mexico as of 2014. The majority of Mexican firms were micro-enterprises (94.3%).

    • The Netherlands

      SMEs comprised 99.8% of Dutch enterprises and employed 66.5% of the labour force in 2014.

    • New Zealand

      Small businesses dominate in New Zealand, with 99% of New Zealand enterprises classified as SMEs (less than 50 employees) in 2014. They had 870 570 employees, representing around 43% of the country’s workforce.

    • Norway

      There was a total of 435 093 enterprises in Norway in 2012, out of which 285 673 were non-employer firms. The bulk of the employer firms were SMEs, employing between 1 and 249 employees and accounting for 99.8% of total firms with employees. Of the firms with employees, 99.5% had less than 250 employees and of the enterprises with at least one employee, 81.3% were microenterprises. Lowering the threshold to 100 employees or more, only 1.3% of the firms with employees, constituting 1 952 firms, may be categorised as large enterprises. If the threshold is set at enterprises with not more than 49 employees, then 145 270 enterprises or 97% of all Norwegian enterprises with employees are SMEs.

    • Portugal

      In 2012, SMEs comprised 99.7% of enterprises in Portugal and employed 78.1% of the labour force. The vast majority of enterprises (87.8%) were micro-enterprises, employing 44.8% of the country’s workforce: 10.4% were small and 1.6% were medium-sized enterprises.

    • Russian Federation

      The Russian Federation does not use the EU definition for SMEs (see ). Moreover, the criteria defining an SME are regularly changing (in 2005, 2009 and 2015), making it thus difficult to conduct a comparative analysis and regular assessments in respect of this segment. The Russian State Statistics Service undertakes a complete statistical census of SMEs every 5 years.

    • Serbia

      In 2013, 99.8% of all Serbian enterprises were SMEsSerbia does not use the standard EU definition for an SME (see )., employing almost 65% of the labour force. According to data from the Ministry of Economy, SMEs accounted for 54.1% of total gross value added of non-financial sector and for 43.2% of total exports of non-financial sector in 2013. At the same time, only 4.4% of all Serbian SMEs recorded net income from exports. Sectorial breakdown shows that most SMEs are involved in trade (30%), manufacturing (15.9%), professional, scientific and innovative activities (11.7%), and in transportation and storage (10.2%).

    • Slovak Republic

      SMEs dominate the Slovak economy, covering 99.6% of the enterprise population in 2014. There has been a constant growth in the number of SMEs over recent years, with a 3% year-on-year increase in 2014. The vast majority of SMEs (87.6%) were micro-enterprises, employing up to 9 employees. Moreover, self-entrepreneurs are an important component of the enterprise population in the Slovak Republic and constitute a significant part of firms with employees. In 2014, there were altogether 37 773 self-entrepreneurs with at least one employee, all of them counted as part of the SME population.

    • Slovenia

      In 2014, 99.6% of all firms in Slovenia were SMEs and 89.2% of firms employed less than 10 employees.

    • Spain

      In Spain, 99.9% of all enterprises were SMEs in 2012, employing 73.8% of the labour force. Out of these, 94.4% were micro-enterprises, 4.8% were small and 0.6% were medium sized enterprises.

    • Sweden

      The Swedish business sector comprises a significant number of SME companies. Together they account for 59% of value added and 66% of employment. Micro-businesses constitute 94.6% of all companies. Most SMEs operate in services, wholesale trade and retail, and construction. There are relatively few Swedish small and medium enterprises in the manufacturing sector. The manufacturing sector provides 17% of the workforce and value added of small and medium-sized enterprises (European Commission, 2014).

    • Switzerland

      SMEs, defined as firms with up to 250 employees, constituted 99.3% of Swiss enterprises in 2013, employing 66.9% of the labour force. Micro enterprises with up to 9 employees accounted for the majority of SMEs (69.6% of SMEs), employing 16.5% of the country’s workforce.

    • Thailand

      There were 2.7 million SMEs (firms with less than 200 employees) in Thailand in 2012, constituting 99.7% of all enterprises and employing 78% of the labour force, including agriculture. Most banks do not use the national SME definition. Instead, they use the loan size as a proxy, and definitions vary across banks.

    • Turkey

      In Turkey, an enterprise is a legal unit or a combination of legal units. The Turkish SME definition has been prepared in line with the EU definition; although the financial thresholds applied are lower (see ). As illustrated in , micro-enterprises accounted for more than 97% of all firms in 2013, whereas only 0.2% of all enterprises employ more than 250.

    • United Kingdom

      There were 1.3 million employer enterprises in the United Kingdom at the start of 2014. 99.5% of these employer enterprises were SMEs with less than 250 employees, employing 52% of the UK workforce. 82% were SMEs with less than 10 employees, also known as micro enterprises.

    • United States

      The SBA broadly classifies small businesses as any firm with 500 or fewer employeesThe SBA has two different approaches for defining small firms. The first approach is to define any firm with less than 500 employees as "small." This practice was first established by the Small Business Act of 1953. However, the same Act required the SBA to establish a size standard that "should vary to account for differences among industries." Second, the Act called on the SBA to "assist small businesses as a means of encouraging and strengthening their competitiveness in the economy." These two considerations are the basis for the SBA current methodology for establishing small business size standards. For further details see The US Small Business Administration (2009) SBA Size Standard Methodology.. These firms account for more than 28 million businesses, or 99.9% of all firms. They employ about half of the private sector’s employees, pay about 42% of the total private sector payroll, generate about 63% of net new private sector jobs, and create about 46% of the private-sector output.For more details on the importance of small businesses in the US economy see The US Small Business Administration, Frequently Asked Questions.

    • EIB Group support to SMEs and midcaps

      Unless otherwise stated, in the remainder of the text references to ‘SMEs’ include midcaps. The EIB defines SMEs as enterprises with fewer than 250 employees and midcaps as enterprises with a minimum of 250 and maximum of 3 000 employees.

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  • Expand / Collapse Hide / Show all Abstracts Annexes

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    • Methodology for producing the national scoreboards

      The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West bank under the terms of international law.

    • Standardised table for SME finance data collection

      Country Name

    • 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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