Part I. Country snapshots

This chapter contains a snapshot view of SME and entrepreneurship finance developments, as well as the scoreboard with core indicators for countries covered in this report. A more comprehensive discussion is provided in the full country profiles published online

    

3. Australia

According to the Bureau of Statistics (ABS), there were 2 234 384 small and medium sized enterprises (SMEs) in Australia in 2016-17. SMEs account for 99.8% of all enterprises in Australia and employ 7.4 million people, which equates to around 68% of employment in the private sector.

The Australian economy has completed its 27th consecutive year of economic growth, with transition from the investment phase of the mining boom towards broader-based sources of growth progressing broadly as expected. Real GDP grew by 2.8% in 2017-18.

Interest rates are historically low for both SMEs and large businesses. SME interest rates in Australia have gradually declined from 8.6% in 2007 to 5.23% in 2017. However, the interest rate spread between SME loans and large enterprise loans increased from 96 basis points in 2007 to 183 basis points in 2008, and remained high at 200 basis points in 2017.

New lending to SMEs declined in two consecutive years since 2015 (4.9% in 2016 and 8.1% in 2017) after a period of growth, having risen by 7.4% (2013), 7.9% (2014) and 6.7% (2015). Total outstanding SME loans increased by 3.8% in 2016 and 3.7% in 2017. In 2017, the share of SME outstanding loans stood at 30.9% of total outstanding business loans.

Total valuations of all investments by Venture Capital and Later Stage Private Equity (VC&LSPE) investment vehicles rose by 4.7% in 2015-16 and by 14.8% in 2016-17, from AUD 8 802 million reported as at 30 June 2015 to AUD 10 575 million as at 30 June 2017. Leasing and hire purchase volumes dropped from AUD 9 546 million in 2007 to a low of AUD 6 904 million in 2009. Leasing and hire purchase volumes have recovered since, rising to AUD 11 516 million in 2017, an increase of 22% over the previous year.

The number of bankruptcies per 10 000 businesses increased from 45 in 2007 to 54 in 2013. It has since reached a ten-year low of 32 in 2017.

The Australian Government has a comprehensive SME agenda aimed at promoting growth, employment and opportunities across the economy. Its policies for promoting SMEs focus on reducing red tape, improving the operating environment for businesses, increasing incentives for investment, and enhancing rewards and opportunities for private endeavour. Policies aiming to increase long-term opportunities for SMEs include innovative finance and crowd-sourced equity funding; competition and consumer policies; taxation and business incentives; export financing; and small business assistance.

Table 3.1. Scoreboard for Australia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

AUD million

188 709

203 880

203 598

223 624

234 271

238 267

241 356

249 979

260 399

270 408

280 339

Outstanding business loans, total

AUD million

710 284

771 265

720 651

705 119

713 755

763 802

748 579

783 277

853 539

879 647

907 287

Share of SME outstanding loans

% of total outstanding business loans

26.57

26.43

28.25

31.71

32.82

32.34

32.24

31.91

31.24

30.74

30.90

New business lending, total

AUD million

374 997

336 145

265 484

265 820

310 696

273 774

292 430

360 436

391 641

341 766

345 952

New business lending, SMEs

AUD million

77 517

79 914

69 562

82 506

81 561

73 674

79 130

85 373

91 126

86 658

79 656

Share of new SME lending

% of total new lending

20.67

23.77

26.20

31.04

26.25

26.91

27.06

23.69

23.27

25.36

23.03

Non-performing loans, total

% of all business loans

0.5

2.07

3.27

3.55

3.16

2.68

2.03

1.39

1.01

1.13

0.78

Interest rate, SMEs

%

8.56

7.99

7.56

8.29

7.94

7.07

6.44

6.18

5.58

5.29

5.23

Interest rate, large firms

%

7.6

6.16

5.85

6.67

6.37

5.29

4.29

4.15

3.59

3.2

3.23

Interest rate spread

% points

0.96

1.83

1.71

1.62

1.57

1.78

2.15

2.03

1.99

2.09

2.00

Non-bank finance

Venture and growth capital

AUD million

6 939

8 315

7 903

8 912

8 700

7 652

8 348

7 907

8 802

9 213

10 575

Venture and growth capital

%, Year-on-year growth rate

 

19.83

-4.95

12.77

-2.38

-12.05

9.10

-5.28

11.32

4.67

14.78

Leasing and hire purchases

AUD million

9 546

9 342

6 904

7 140

7 579

8 691

7 549

8 690

10 368

9 474

11 516

Factoring and invoicing

AUD million

54 757

64 991

63 101

58 661

61 422

63 361

63 272

62 391

64 400

 

Other indicators

Bankruptcies, Unincorporated

Number

5045

4427

4426

5616

5266

5858

4761

4007

4088

4350

4168

Bankruptcies, Unincorporated

Per 10,000 enterprises

42

36

36

45

43

50

42

35

34

36

34

Bankruptcies, Corporates

Number

7 489

9 067

9 465

9 605

10 439

10 583

10 854

8 822

10 093

8 511

7 819

Bankruptcies, Corporates

Per 10,000 companies

48

55

56

54

57

55

54

41

45

36

31

Bankruptcies, Total

Per 10,000 businesses

45

47

47

50

51

53

49

39

41

36

32

Invoice payment days, average

Number of days

53

56

54

53

54

53

54

53

47

 

Outstanding business credit, Unincorporated business

AUD million

111 132

117 360

118 651

121 880

124 793

131 227

136 413

141 931

149 628

156 793

164 053

Outstanding business credit, Private trading corporations

AUD million

499 822

555 064

514 268

500 067

514 463

523 799

530 638

556 069

591 751

624 743

635 854

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

4. Austria

In 2015, SMEs made up 99.7% of all firms and employed 67.5% of the labour force.

New lending has been in continuous decline since 2009, except for a slight bump in 2011. This downward pattern continued in 2016, with new lending to SMEs falling by 7.6%. This development is dominated by a decline in short term loans (less than 6 months). These loans are typically of very short maturity and are regularly rolled over. Due to multiple counting of these loans, their development has an over-proportionate effect on new loans statistics. Whereas short term loans decreased by 50% from 2009 to 2016, long term loans increased by 11.1% over the same period.

The weak dynamics of bank lending in the corporate sector are due to both demand and supply side factors. However, for the first time since 2007, demand for bank loans reveals a clear positive trend.

Interest rates for SMEs decreased for the fifth year in a row, further improving on a historical low of 2.0% in 2015 to reach 1.9% in 2016. Interest rates for large firms as well as the interest rate spread declined in 2016.

As in many countries, venture and growth capital investments in Austria are very volatile. One major investment can make a big difference in the data. Total venture and growth capital slumped in 2012 to less than EUR 70 million, after a peak of EUR 208 million in 2011. At EUR 76.2 million in 2016, this figure more than halved compared to the previous year.

Crowdfunding as an alternative source of financing is gaining importance. In 2016, Austrian crowdfunding platforms collected EUR 22.8 million compared to EUR 8.7 million in 2015.

In 2016, bankruptcies per 1 000 firms stood at their lowest level since 2009 amounting to only 10 per 1 000 firms compared to 18 in 2009. Rejected loan applications had been decreasing from 10.2% in 2009 to 0.4% in 2012. However, in 2016, this indicator stood at 2.5%, down from 5.5% in the previous year. The ratio of non-performing loans (NPLs) decreased markedly from 4.2% in 2015 to 3.1% in 2016.

Business-to-business (B2B) payment delays have not recovered to their 2007 level of 8 days, and have ranged from 11 to 13 days in 2009-14. Business-to-customer (B2C) payment delays have more than halved in the reference period, falling from 20 days in 2007 to 9 days in 2014.

In July 2016, the Austrian Government launched a comprehensive start-up programme with a total volume of about EUR 185 million within three years. This “Start-up Package” aims at fostering access to finance, realising the potential of high-growth firms and reducing barriers to improve the start-up ecosystem in Austria.

Table 4.1. Scoreboard for Austria

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Debt

Outstanding business loans, total

EUR million

123 067

134 897

132 413

135 465

138 840

140 384

140 329

136 606

137 203

136 829

New business lending, total

EUR million

..

..

85 490

74 896

73 041

80 867

73 460

73 126

61 711

55 543

New business lending, SMEs

EUR million

..

..

10 054

9 414

9 476

9 347

8 884

8 237

8 116

7 499

Share of new SME lending

% of total new lending

..

..

11.76

12.57

12.97

11.56

12.09

11.26

13.15

13.50

Short-term loans, SMEs

EUR million

..

..

6 014

5 139

4 944

4 901

4 536

4 016

3 345

3 010

Long-term loans, SMEs

EUR million

..

..

4 040

4 275

4 532

4 446

4 348

4 221

4 771

4 489

Share of short-term SME lending

% of total SME lending

..

..

59.82

54.59

52.17

52.43

51.06

48.76

41.21

40.14

Government loan guarantees, SMEs

EUR million

341

164

214

173

143

158

167

172

204

192

Government guaranteed loans, SMEs

EUR million

429

211

279

226

185

207

211

225

258

282

Direct government loans, SMEs

EUR million

535

579

574

607

633

539

594

490

543

583

Non-performing loans, total

% of all business loans

..

..

..

..

..

..

..

4.1

4.2

3.1

Interest rate, SMEs (loans up to EUR 1 million)

%

5.11

5.47

2.89

2.43

2.92

2.46

2.28

2.27

2.02

1.92

Interest rate, large firms (loans over EUR 1 million)

%

4.69

5.04

2.33

1.96

2.55

1.98

1.77

1.74

1.61

1.54

Interest rate spread

% points

0.42

0.43

0.56

0.47

0.37

0.48

0.51

0.53

0.41

0.38

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

26.33

27.53

25.50

28.32

27.64

25.70

28.66

21.23

Rejection rate

1-(SME loans authorised/ requested)

..

..

10.24

2.60

0.78

0.41

2.67

6.02

5.52

2.49

Non-bank Finance

Venture and growth capital (seed, start-up, later stage)

EUR million

60.9

57.4

73.5

43.3

97

38.6

57.1

59.7

108.9

50.5

Venture and growth capital (growth capital)

EUR million

22.9

15.7

39.6

31.9

111.6

26

25

45.2

77.8

25.7

Venture and growth capital (total)

EUR million

83.8

73.1

113.1

75.2

208.6

64.6

82.1

104.9

186.7

76.2

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

-12.8

54.7

-33.5

177.4

-69.0

27.1

27.8

78.0

-59.2

Other Indicators

Payment delays, B2B

Number of days

..

8

8

11

12

11

12

13

..

..

Payment delays, B2C

Number of days

20

16

6

11

11

9

9

9

..

..

Bankruptcies, total

Number

6 295

6 315

6 902

6 376

5 869

6 041

5 459

5 423

5 150

5 226

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

5. Belgium

In 2015, SMEs dominated the business enterprise landscape in Belgium, accounting for 99.9% of all firms.

The outstanding stock of SME loans expanded 5.6% in 2017, 3.9 percentage points up from its growth rate the previous year.

SME interest rates continued to decrease, and were 1.7% in 2017. The interest rate spread between loans charged to large enterprises and loans charged to SMEs was 26 basis points in 2017.

Survey data illustrates that lending conditions eased between 2013 and the end of 2015, and have remained relatively stable since then.

After having experienced strong growth in 2016 (25%), leasing volumes receded moderately in 2017 (-3.49%). Overall, factoring continues to be more widely used by Belgian companies. Factoring expanded strongly in 2017, growing 10.81% during the year and achieving rates of more than 10% every year between 2012 and 2017 (with the exception of 2016, where the factoring growth rate was 2.74%). Factoring contributed to almost 16% of GDP in 2017, as opposed to only 6.3% of GDP in 2008.

Venture capital investments continue to show considerable variation due to the small number of deals conducted every year. Total venture capital investments decreased 38.8% in 2017, after having increased 60% in 2016.

Average payment delays for business to business transactions have been decreasing for the entire reference period. Payment delays decreased from a 17-day average in 2009 to an 8-day average in 2017.

After a steady decrease of bankruptcies during the 2014–16 period, the number of registered failures rose to 9 968 (+8.7%) in 2017.

Policy initiatives to ease SMEs’ access to finance are taken at the federal and regional level.

The Walloon region launched the “Helping hand” loan initiative in 2016 as a pilot project. The initiative aims at mobilising private citizen savings for young SMEs through a tax-efficient loan mechanism. This initiative was formally introduced in 2017 and will remain operational until December 2019.

The Federal Government enacted a corporate income tax reform in December 2017. The standard corporate income tax rate will be gradually reduced from 33.99% in 2017 to 25% in 2020. SMEs will further benefit from a marginal tax rate of 20% on the first EUR 100 000 they generate in profits.

Table 5.1. Scoreboard for Belgium

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

82.8

89.1

88.9

93.9

100.0

109.6

109.5

100.7

104.4

108.0

114.1

Outstanding business loans, total

EUR billion

134.2

149.4

141.8

150.6

153.7

167.6

162.0

151.7

164.6

163.4

170.1

Share of SME outstanding loans

% of total outstanding business loans

61.72

59.62

62.73

62.35

65.07

65.43

67.60

66.39

63.44

66.12

67.05

Outstanding short-term loans, total

EUR billion

37.4

40.4

34.1

35.4

36.5

34.5

33.8

31.4

30.9

32.0

33.6

Outstanding long-term loans, total

EUR billion

59.7

66.1

72.2

77.2

79.3

82.5

83.9

80.3

84.8

90.8

97.8

Share of short-term lending, total

% of total business lending

38.52

37.91

32.08

31.45

31.50

29.48

28.74

28.08

26.71

26.05

25.58

Government loan guarantees, SMEs

EUR million

..

156.5

411.9

553.9

317.5

266.0

480.2

265.6

448.2

398.3

458.4

Government guaranteed loans, SMEs

EUR million

..

312.7

832.7

888.4

561.7

484.3

826.1

476.7

805.6

735.9

828.3

Direct government loans, SMEs

EUR million

..

113.7

142.2

141.9

148.3

170.5

235.6

..

..

..

..

Interest rate, SMEs

%

5.45

5.70

3.01

2.51

2.88

2.32

2.06

2.09

1.83

1.72

1.66

Interest rate, large firms

%

4.72

5.05

2.09

1.70

2.22

1.74

1.76

1.77

1.60

1.34

1.40

Interest rate spread

% points

0.73

0.65

0.92

0.81

0.66

0.58

0.30

0.32

0.23

0.38

0.26

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

74.30

71.90

78.60

..

..

..

..

..

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

22.22

26.46

30.20

29.33

29.36

39.33

36.61

36.71

37.18

Rejection rate

1-(SME loans authorised/ requested)

..

..

0.52

5.13

6.44

10.40

10.91

5.88

5.71

6.13

5.07

Utilisation rate

SME loans used/ authorised

77.80

79.05

80.69

80.07

80.16

77.45

77.79

79.76

79.62

80.11

79.63

Non-bank finance

Venture and growth capital

EUR million

395.23

355.54

448.52

243.18

224.40

351.63

285.13

401.62

358.27

573.24

350.70

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

-10.04

26.15

-45.78

-7.72

56.70

-18.91

40.86

-10.79

60.00

-38.82

Leasing and hire purchases

EUR million

4405.9

4856.4

3756.4

4005.5

4439.0

4450.2

4121.7

4356.9

4800.5

6009.6

5800.1

Factoring and invoicing

EUR million

19.2

22.5

23.9

32.2

36.9

42.4

47.7

55.4

61.2

62.8

69.6

Other indicators

Payment delays, B2B

Number of days

..

..

17

17

15

19

18

19

13

10

8

Bankruptcies, total

Number

7 680

8 476

9 420

9 570

10 224

10 587

11 740

10 736

9 762

9 170

9 968

Bankruptcies, total (growth rate)

%, year-on-year growth rate

..

10.36

11.14

1.59

6.83

3.55

10.89

-8.55

-9.07

-6.06

8.7

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

6. Brazil

Micro and small-sized enterprises (MSEs) form an essential part of the Brazilian economy, accounting for 98.5% of all legally constituted companies (11.5 million), for 27% of GDP, and for 41% of the total payroll.

The reference interest rate of Banco Central do Brasil (Special Clearance and Escrow System - SELIC) has been gradually declining, from 14.15% per annum in December 2015, to 13.65% in December 2016, 6.9% in December 2017 and 6.4% in August 20181. The previous period of rate hike (from 7.25% in March 2013 to 14.25% in September 2016) led to high interest rates on loans for large corporate borrowers (14.8%) and SMEs (30.6%), leading to a shrinking demand for new SME loans. Interest rates have increased more for micro-enterprises and SMEs than for large businesses. However, this trend was reversed when the central bank decreased its rate at the end of 2016, thus decreasing interest rates for SMEs.

The stock of SME loans fell in 2015 and new lending to SMEs declined in 2014 and 2015. Both observations are in contrast with lending to large businesses, where the outstanding stock of loans, as well as new lending was up in 2014 and 2015.

Since 2008, large companies have been receiving a larger share of the business loans granted compared to SMEs. The government has taken on a more active role in this area, often with the aim to provide financial services to small businesses, excluded from classic financial institutions. Notable developments include a micro-credit programme, a quota to use 2% of demand deposits of the National Financial System to finance loans to low-income individuals and micro entrepreneurs, and a strong increase in the number of agencies where financial services are provided.

The regulatory framework for angel investors has been revised in 2016 and further adjusted in 2017, removing some long-standing barriers for investors in SME markets, most notably by offering more legal protection in the case of company closures, more latitude to investment and more information sharing between recipients and investors. In addition, new regulations concerning investment-based crowdfunding and FinTech were introduced in 2017 and 2018.

SEMPE, the Special Secretariat for Micro and Small Enterprises (SEMPE/MDIC) is the main body of the Brazilian government responsible for formulating, coordinating, articulating and defining public policy guidelines aimed at strengthening, expanding and formalising artisans, individual entrepreneurs and micro and small enterprises. In addition, SEMPE/MDIC leads the articulation of actions aimed at improving the business environment and at contributing to the expansion and sustainability of micro and small enterprises, with the aim to contribute to employment and income generation.

Table 6.1. Scoreboard for Brazil

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Outstanding business loans, SMEs

BRL billion

281.13

347.21

388.58

476.96

564.12

629.56

681.31

692.26

656.25

578.29

523.36

Outstanding business loans, total

BRL billion

506.61

689.55

780.83

935.86

1 114.03

1 286.53

1 460.03

1 623.01

1 734.61

1 565.18

1 436.38

Share of SME outstanding loans

% of total outstanding business loans

55.49

50.35

49.76

50.97

50.64

48.93

46.66

42.65

37.84

36.95

36.44

New business lending, total

BRL billion

..

..

..

..

..

917.83

948.01

992.11

1 027.21

817.48

735.23

New business lending, SMEs

BRL billion

..

..

..

..

..

566.88

562.21

532.2

490.9

408.98

398.48

Share of new SME lending

% of total business lending

..

..

..

..

..

61.76

59.3

53.64

47.79

50.03

54.20

Outstanding short-term loans, SMEs

BRL billion

105.57

109.37

104.07

119.57

150.72

158.58

161.9

155.96

141.47

122.28

116.75

Outstanding long-term loans, SMEs

BRL billion

160.04

200.91

240.04

309.64

386.91

469.35

518.06

534.8

513.04

454.62

403.23

Share of short-term SME lending

%

39.75

35.25

30.24

27.86

28.03

25.25

23.81

22.58

21.61

21.20

22.45

Government guaranteed loans, SMEs

BRL billion

0.07

0.08

0.11

0.05

2.21

2.01

1.74

2.02

2.84

3.27

5.05

Direct government loans, SMEs

BRL billion

10.09

11.76

13.85

14.47

17.16

18.93

22.12

24.12

27.21

29.06

30.46

Non-performing loans, total

% of all business loans

1.51

1.53

2.65

1.82

2.01

2.21

1.84

1.88

2.39

3.15

2.99

Non-performing loans, SMEs

% of SME loans

2.64

2.79

4.68

3.39

3.63

4.18

3.56

3.9

5.43

6.7

5.67

Interest rate, SMEs

%

..

..

..

..

..

19.7

23.7

25.2

34.8

31.7

25.1

Interest rate, large firms

%

..

..

..

..

..

9.0

12.0

13.3

16.4

17.4

9.0

Interest rate spread

 % points

..

..

..

..

..

10.7

11.7

11.9

18.4

14.3

16.1

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

7. Canada

In 2017, Canadian small businesses (1-99 employees) constituted 97.9% of all businesses and employed 8.3 million individuals, or 69.7% of the private sector labour force.

Supply-side survey data shows that debt outstanding to all businesses increased by 6.6% in 2017, to CAD 823 billion, while lending to small businesses increased by 3.3%, to CAD 102.5 billion. Small businesses’ share of total outstanding business loans decreased by 0.4 percentage point, to 12.4% in 2017 - its lowest level since 2000.

Small business credit conditions have remained relatively stable since 2011. The average interest rate charged to small businesses in 2017 slightly decreased to 5.2% from 5.3% in 2016. The average business prime rate, which remained at 3% over the 2011-14 period, slightly decreased to 2.8% in 2015 and to 2.7% in 2016, before increasing again to 2.9% in 2017. The business risk premium is back to its 2015 level of 2.3% in 2017, reflecting stable access to finance for small businesses in Canada.

The small business 90-day loan delinquency rate has returned to pre-recession levels. In 2017, the 90-day loan delinquency rate reached 0.47%, lower than the level of 0.66% observed in 2007.

Equity financing increased by 10.6% in 2017, reaching CAD 3.5 billion. Between 2016 and 2017, early stage venture capital increased by 25.7%, reaching CAD 2 billion, while later stage venture capital declined by 4%, reaching CAD 1.3 billion.

In 2017-18, the Government of Canada continued its commitment to support entrepreneurship and the growth of SMEs. In particular, the government is supporting innovative and growth-oriented businesses in reaching their potential, and to helping firms put innovation at the core of their business strategy. In February 2018, the five winners of the Innovation Supercluster Initiative were announced, which include SMEs and large businesses, as well as academic institutions across the country, focusing on advanced manufacturing, artificial intelligence, digital technology, oceans, and protein industries.

The government has also made CAD 400 million available through the Business Development Bank of Canada (BDC), a financial Crown corporation, for the new Venture Capital Catalyst Initiative (VCCI) that will increase late-stage venture capital available to Canadian entrepreneurs.

Futurpreneur Canada, a not-for-profit organisation, which provides mentorship, learning resources and start-up financing to young entrepreneurs, also received CAD 14 million over two years in funding, starting in 2017-18, to continue its support of Canada’s next generation of entrepreneurs.

Supporting women entrepreneurs has continued to be one of the key focus areas for the Government of Canada. In Budget 2018, the government announced its CAD 2 billion commitment to its new Women’s Entrepreneurship Strategy, which provides dedicated support to encourage more women to start and grow their businesses, as well as to work with them to move into exporting.

Table 7.1. Scoreboard for Canada

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

CAD billion

83.4

83.4

86.4

85.7

89.1

87.2

91.1

94.0

96.1

99.2

102.5

Outstanding business loans, total

CAD billion

479.8

534.0

482.3

489.5

503.2

548.0

592.6

642.9

716.2

772.4

823.7

Share of SME outstanding loans

% of total outstanding business loans

17.39

15.61

17.92

17.50

17.71

15.90

15.38

14.62

13.42

12.84

12.45

New business lending, total

CAD billion

..

..

..

..

126.2

141.6

151.0

168.7

188.4

204.0

233.9

New business lending, SMEs

CAD billion

..

..

 ..

..

20.2

21.7

22.8

23.2

24.0

22.8

25.2

Share of new SME lending

% of total new lending

..

..

..

..

15.99

15.30

15.10

13.74

12.73

11.16

10.78

Outstanding short-term loans, SMEs

CAD billion

15.1

..

6.9

..

15.6

..

..

24.2

Outstanding long-term loans, SMEs

CAD billion

21.1

..

..

..

..

12.8

..

12.4

..

..

32.4

Share of short-term SME lending

% of total SME lending

41.62

.. 

43.40

36.30

35.13

39.00

46.00

55.71

47.20

36.20

42.8

Government loan guarantees, SMEs

CAD billion

1.20

1.30

1.20

1.30

1.30

1.10

1.10

1.50

1.20

1.3

1.4

Direct government loans, SMEs

CAD billion

4.40

4.10

5.50

4.70

6.00

5.80

4.60

6.50

6.70

7.9

8.0

Interest rate, SMEs

%

7.50

..

6.20

5.80

5.30

5.40

5.60

5.10

5.10

5.30

5.20

Interest rate, large firms

%

6.10

..

3.10

2.60

3.00

3.00

3.00

3.00

2.80

2.70

2.90

Interest rate spread

% points

1.40

..

3.10

3.20

2.30

2.40

2.60

2.10

2.30

2.60

2.30

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

47.7

..

56.1

66.7

64.8

76.0

56.0

66.6

80.0

74.0

64.1

Percentage of SME loan applications

SME loan applications/ total number of SMEs

17.0

..

14.0

18.0

24.0

26.0

30.0

27.0

23.0

26.0

26.0

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

9.0

8.0

7.0

9.0

12.8

7.0

9.0

9.5

Non-bank finance

Venture and growth capital

CAD billion

..

..

..

..

..

..

1.90

2.00

2.30

3.20

3.50

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

..

5.3

15.0

39.1

9.4

Other indicators

90-Day Delinquency Rate Small business

%

0.69

1.01

1.42

0.84

0.63

0.57

0.42

0.43

0.59

0.51

0.47

90-Day Delinquency Rate Medium business

%

0.05

0.06

..

..

0.04

0.01

0.01

0.02

0.04

0.05

0.04

Leasing request rate

 %

20.8

 

1.00

2.00

7.00

8.00

11.0

7.90

8.00

9.00

7.2

Leasing approval rate

 %

93

 

76

97

97.3

95

95

98.6

94

94

97.6

Bankruptcies, SMEs

Per 1 000 firms with employees

7.00

6.60

5.90

4.60

4.30

3.80

3.60

3.40

3.30

3.10

2.84

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

 

-5.71

-10.6

-22.0

-6.52

-11.6

-5.26

-5.56

-2.94

-6.06

-8.39

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

8. Chile

Economic growth has been declining in Chile since 2013. After having experienced increasing growth rates between 2014 (1.8%) and 2015 (2.3%), GDP growth decreased to 1.6% in 2016 and to 1.5% in 2017. However, according to the Central Bank, growth in 2018 is expected to range between 2.5% and 3.5% due to increased global growth and better economic forecasts for Chile’s key commercial partners.

According to the Banking Landscape Report (SBIF), lending activity – measured as growth in credit placements – grew 2.5% over 2016-17. The SME share of outstanding business loans likewise increased in 2017 to 20.7%, reaching its highest level over the reference period. Micro and small enterprises are the primary actors responsible for the rise in outstanding SME loans and Banco Estado has been the key financial institution working to improve SME access to finance along with Corporación de Fomento de la Producción (CORFO).

Credit conditions have been more restrictive for SMEs in recent quarters. According to the Central Bank, SMEs display stronger credit demand, but face more restricted credit supply. Nevertheless, credit approval conditions have remained stable for both large firms and SMEs, and the interest rate spread between large firms and SMEs fell from 5.3% in 2016 to 4.7% in 2017.

According to Fourth Longitudinal Enterprise Survey (ELE) data, which surveyed more than 320 000 enterprises between 2014 and 2015, rejection rates for SME loans dropped significantly from 41.4% in 2007, to 14.7% in 2015, and have remained stable since. In 2015, the SME loan utilisation rate was 96.7%, the highest rate since 2007. The rise of the utilisation rate related to a shift toward bank financing as a primary source of funds (as opposed to self-generated resources), and to an overall decline in interest rates.

Regarding Venture Capital Funds, the Corporación de Fomento de la Producción (CORFO) and Start-Up Chile programmes are the main instruemnents of SME equity financing, although other private and public initiatives have been developed as well. Venture capital investments declined in 2017 to CLP 21.9 billion from CLP 40 billion in 2016.

A novelty regarding SME finance is the development of Chile’s Fintech Industry, which has grown 34% in the last 2 years. Rapid growth in this space highlights a thriving ecosystem composed of over 70 companies offering a diverse array of financial services to SMEs, ranging from payment and remittances to lending to crowdfunding and scoring services. This has been taken into account by the Ministry of Finance, which recently announced that it would work along the Financial Stability Council to develop regulation for the industry by 2019.

Payment delays to SMEs have decreased since 2010. Nevertheless, the average payment term for SMEs increased to 49 days during the fourth trimester of 2017. Average payment delays for large firms remained stable during this time.

The Fondo de Garantía para Pequeños Empresarios (FOGAPE) and CORFO Credit Guarantee Schemes provide guarantee rights to financial intermediaries through an auction process. The number of operations and value of guarantee-backed credits increased under both programmes compared to previous years. During 2017, Fondo de Garantía de Inversiones (FOGAIN) and FOGAPE backed credits totalling CLP 766 billion and CLP 489 billion, respectively.

Table 8.1. Scoreboard for Chile

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans. SMEs

CLP trillion

6.8

7.6

8.1

9.3

10.1

11.5

11.8

13.7

15.8

17.3

18.7

Outstanding business loans. total

CLP trillion

40.9

49.9

46.3

48.1

57.2

64.6

69.8

76.4

84.9

88.7

90.3

Share of SME outstanding loans

% of total outstanding business loans

16.7

15.2

17.5

19.3

17.7

17.9

16.9

18.0

18.6

19.5

20.7

New business lending. total

CLP trillion

..

..

..

53.3

58.0

58.0

58.1

63.9

67.8

67.4

67.7

New business lending. SMEs

CLP trillion

..

..

..

2.6

3.1

3.8

3.8

4.4

5.1

5.1

5.6

Share of new SME lending

% of total new lending

..

..

..

4.9

5.3

6.5

6.6

6.8

7.5

7.6

8.2

Outstanding Short-term loans. SMEs

CLP trillion

..

..

..

1.6

2.0

2.3

1.8

1.8

1.9

1.8

1.8

Outstanding Long-term loans. SMEs

CLP trillion

..

..

..

1.0

1.1

1.5

2.0

2.5

3.2

3.3

3.8

Share of short-term SME lending

% of total SME lending

..

..

..

60.2

63.3

60.3

47.8

41.9

36.9

35.8

32.8

Government loan guarantees. SMEs

CLP trillion

0.2

0.3

0.8

1.1

1.3

1.9

1.9

1.6

1.7

1.8

1.7

Government guaranteed loans. SME

CLP trillion

0.3

0.5

1.3

1.8

2.0

2.9

3.1

2.3

2.4

2.6

2.6

Non-performing loans. total

% of all business loans

2.5

2.2

2.1

2.2

2.4

2.6

2.4

2.1

2.3

Non-performing loans. SMEs

% of all SME loans

..

..

5.9

6.1

5.5

5.4

6.1

6.1

5.9

5.3

5.2

Interest rate. SMEs

%

..

..

..

..

..

..

11.8

10.3

9.3

9.3

8.4

Interest rate. large firms

%

..

..

..

..

..

..

4.7

4.0

3.8

4.0

3.7

Interest rate spread

% points

..

..

..

..

..

..

7.1

6.3

5.5

5.3

4.7

Collateral. SMEs

% of SMEs needing collateral to obtain bank lending

44.0

..

49.8

..

..

..

72.8

..

68.1

..

..

Percentage of SME loan applications

SME loan applications/total number of SMEs

32.9

..

32.4

..

..

..

26.4

..

24.6

..

..

Rejection rate

1-(SME loans authorized/ requested)

41.4

..

15.0

..

..

..

12.3

..

14.7

..

..

Utilization rate

SME loans used/ authorized

86.6

..

91.0

..

..

..

87.9

..

96.7

..

..

Non-bank finance

Venture and growth capital

CLP billion

26.7

19.3

22.2

27.1

33.9

43.1

30.8

43.2

34.7

40.0

21.9

Venture and growth capital (growth rate)

%. year-on-year growth rate

..

-27.8

15.3

22.0

25.1

27.0

-28.5

40.1

-19.6

-100

-45.3

Leasing and hire purchases

CLP billion

3.0

3.6

3.5

3.8

4.5

5.0

5.6

6.2

6.6

6.7

7.8

Factoring and invoicing

CLP billion

2.0

2.0

1.4

1.9

2.4

2.6

2.6

2.6

2.8

3.0

3.8

Other indicators

Payment delays. B2B

Number of days

..

..

..

75.8

74.9

56.7

52.7

55.2

58.0

54.9

56.0

Bankruptcies. SMEs

Number

122

127

125

136

146

146

164

6

154

295

285

Bankruptcies. SMEs (growth rate)

% year-on-year growth rate

..

4.1

-1.6

8.8

7.4

0.0

12.3

-96.3

2 467

91.6

-3.4

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

9. Colombia

Micro, small and medium enterprises (MSMEs) represent an important part of the Colombian economy. In 2017, according to the National Department of Statistics (DANE), MSMEs contributed to 40% of GDP, generated 80% of employment and constituted 90% of the country's productive sector.

Bank credit is the main source of finance for SMEs. According to the Great Pyme Anif Suvey, 40% of SMEs requested credit in 2017. This percentage amounted to 43% in the industrial sector, 42% in the commercial sector and 35% in the service sector. When comparing these results with 2016, credit request increased by 6 percentage points over a year (34% on average in 2016). This trend is in line with the drop in inflation, which led to an easing of the monetary policy of the Bank of the Republic, as well as to a decline in interest rates.

An important part of Colombian SMEs did not access alternative financing sources during the second half of 2017 (41% in the industry, 39% in the commerce and 41% in the services sector). Own resources were the most important source of financing for SMEs (24% industry, 25% commerce and 30% services), followed by suppliers the firms work with (23% industry, 22% commerce and 15% services). On the other hand, leasing, reinvestment of profits, factoring and the extra banking market did not exceed 5% for any macro-sector.

According to the National Association of Financial Institutions (Anif), most SMEs used credit resources to finance working capital in the second half of 2017 (around 68% in the industry, 67% in the commerce one and 51% in the services sector). The second most important reason was the consolidation of liabilities into one main source of debt. The percentage of companies that used these resources to search for better terms, rates or amortisation conditions for current loans with financial intermediaries was 25% in the industry sector, 24% in the commerce, and 23% in the services sector. The third most popular source of finance was the purchase or lease of machinery for the industrial sector 16%, and remodelling or adjustments for 14% of the trade and 17% of the services sector. Over 2016-17, the value of loans to MSMEs increased by 4.5%, and MSME loans as a share of total commercial loans increased by 24 basis points, from 25.53% of 2016 to 25.77% in 2017.

The decrease in interest rates in 2017 led to an increase of 6.24% in short-term loans and a 4% increase in long-term loans for SMEs. The average interest rate applied to loans to SMEs decreased by 150 basis points, from 16.87% in 2016 to 15.37% in 2017.

From January to September 2017, the Investment Program “Bank of Opportunities" spent USD 2 578.5 million2 of loans to micro-entrepreneurs through Banks, Financing Companies, microcredit NGOs and Cooperatives.

The National Guarantee Fund S.A. is the entity through which the government seeks to facilitate access to credit for micro, small and medium enterprises, by granting guarantees. In a legal act derived from the obligation of a debtor against a financial intermediary, the national guarantee fund pays, in whole or in part, the obligation guaranteed in the event of default by the debtor. In 2013, the Law 1676 of 2013 on Registry of Guarantees was enacted to expand the possibilities of access to credit through guarantees for entrepreneurs throughout the country.

Table 9.1. Scoreboard for Colombia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

COP billion

25.61

28.59

26.58

29.12

39.97

46.76

51.6

55.23

58.17

62.09

64.88

Outstanding business loans, total

COP billion

78.4

94.7

95.9

113.8

134.8

152.8

171.3

197.2

226.3

243.2

251.8

Share of SME outstanding loans

% of total outstanding business loans

32.67

30.19

27.70

25.58

29.66

30.61

30.11

28.01

25.70

25.53

25.77

New business lending, total

COP billion

67.7

76.0

77.2

79.0

77.7

95.4

104.0

117.0

117.7

117.3

153.3

New business lending, SMEs

COP billion

13.2

13.5

15.22

16.91

21.09

23.53

23.57

24.69

25.53

25.3

34.11

Share of new SME lending

% of total new lending

19.50

17.76

19.71

21.39

27.13

24.67

22.65

21.10

21.70

21.57

22.25

Outstanding short-term loans, SMEs

COP billion

4.98

7.52

6.14

6.41

10

11.55

12.36

12.93

13.8

13.59

14.44

Outstanding long-term loans, SMEs

COP billion

20.63

21.07

20.44

22.71

29.97

35.22

39.24

42.3

44.37

48.5

50.44

Share of short-term SME lending

% of total SME lending

19.45

26.30

23.10

22.01

25.02

24.70

23.95

23.41

23.72

21.89

22.26

Government loan guarantees, SMEs

COP billion

0.56

1.39

1.82

1.94

5.46

6.19

7.14

7.51

7.72

10.52

11.53

Government guaranteed loans, SMEs

COP billion

2.23

2.59

2.98

3.16

7.26

9.12

10.81

11.96

12.69

15.37

16.51

Non-performing loans, total

% of all business loans

0.95

1.27

1.59

1.07

1.00

1.03

1.08

1.33

1.34

1.51

2.36

Non-performing loans, SMEs

% of all SME loans

2.52

3.66

5.05

3.68

1.76

1.81

1.99

2.45

2.25

3.12

3.71

Interest rate, SMEs

%

20.09

23.13

20.43

18.66

14.34

14.68

13.24

13.54

14.69

16.87

15.37

Interest rate, large firms

%

12.53

14.24

10.09

7.23

9.28

9.25

7.98

8.33

8.78

11.00

9.16

Interest rate spread

% points

7.56

8.89

10.34

11.43

5.06

5.43

5.26

5.21

5.91

5.86

6.21

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

79.25

87.54

86.28

87.31

90.04

90.12

90.02

89.30

91.04

91.71

92.15

Percentage of SME loan applications

SME loan applications/ total number of SMEs

49

53

44.6

49.6

47

44

43.3

39.6

42.6

34

40

Rejection rate

1-(SME loans authorised/ requested)

2

4

9

5

3

4

7

3

7.5

4

8

Utilisation rate

SME loans used/ authorised

98

96

91

95

97

96

93

97

92.5

96

92

Non-bank finance

Venture and growth capital

COP billion

1.83

2.91

4.23

Venture and growth capital (growth rate)

%, Year-on-year growth rate

59 .3

45 .5

Leasing and hire purchases

COP billion

11.01

12.30

12 .88

14 .06

17.73

21.08

24.07

27.79

33.34

39.45

41.98

Factoring and invoice discounting

COP billion

5.77

6.04

7.15

7.01

12.85

10.55

17.56

23.75

31.47

25.77

25.53

Other indicators

Payment delays, B2B

Number of days

49

50

61

62

59

55

56

65

66

85

95

Bankruptcies, SMEs

Number

33

95

149

159

178

116

156

141

164

200

246

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

187.9

56.84

6.71

11.95

-34.8

34.48

-9.62

16.31

21.95

23.00

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

10. Czech Republic

In 2017, there were roughly 1.1 million active enterprises in the Czech Republic. 99.8% of these firms were SMEs with less than 250 employees each. Together, they employed almost 1.8 million people, or 58.4% of the Czech Republic’s workforce. Micro-firms dominated the business landscape, comprising 96.3% of all SMEs in 2017 (roughly stable from 2016).

SME interest rates stayed at the same level in 2017 vis-à-vis 2016. Over the 2007-16 period, SME interest rates continued dropping year-on-year (by 50.3% in total). The recent stagnation in interest rates was likely caused by tightening a monetary policy by the Czech National Bank (CNB) from 2017 onwards, which decided to increase interest rates from 0.25 to 0.50 percentage points in 2017.

Venture capital investments peaked in 2008, and then declined dramatically. This trend continued in 2017, with VC investments amounting to 8.6% of their 2008 value. Growth capital fell even more steeply, from EUR 192 million in 2009, to EUR 4.9 million in 2016. In 2017, it grew to 7.6 million.

Government support for enterprises and entrepreneurs primarily comprises measures with respect to developmental and operational financing, export support, support of the energy sector, development of entrepreneurial skills and financial literacy of entrepreneurs, technical education and research, as well as development and innovation.

In December 2012, the Czech government adopted a Small and Medium Sized Enterprises Support Strategy 2014-20 (SME 2014+), which represents the key strategic document for the preparation of the European Union (EU) cohesion policies over the 2014–20 programming period in the area of enterprise development. This includes the Operational Programme Enterprise and Innovations for Competitiveness (OPEIC), and similarly important national SME support programmes.

SME 2014+ also acknowledges the need to support social enterprises and strengthen social entrepreneurs’ education. The SME 2014+ is implemented through national programmes that support enterprises, such as the GUARANTEE, ENERG, VADIUM or Inostart programmes; and via the OPEIC.

SME 2014+ aims to motivate entrepreneurs to utilise available funding for the development of their businesses through national and EU programmes. This includes several tools, such as government loan guarantees (Czech-Moravian Guarantee and Development Bank), financing schemes for exporting SMEs (Czech Export Bank) and innovative businesses (INOSTART programme), as well as a programme to draw financial resources from the EU structural fund (OPEIC), which provides support to SMEs through grants, preferential loans and guarantees.

The Czech-Moravian Guarantee and Development Bank (CMGDB) is a specialised state-owned banking entity with a primarily mission of facilitating SME access to financing. Next to the programmes GUARANTEE and EXPANSION, the CMGDB launched two new programmes – ENERG and VADIUM, financed by the national budget. In June 2017, the CMGDB launched a new programme ENERG, earmarked for SMEs located in the capital of Prague. Entrepreneurs can obtain an investment loan of up to CZK 20 million for investment projects that spur energy savings in the company. In July 2018, the Bank launched a new programme VADIUM, which provides small entrepreneurs with guarantees (of up to CZK 50 million) for bids in public tenders. In 2018, the Bank also became an intermediary for equity investments from the Central Europe Fund of Funds (CEFoF), administered by the European Investment Fund. CEFoF will invest into innovative SMEs and small mid-caps in a later stage venture and growth phase, with a volume of financial resources of at least EUR 80 million.

Table 10.1. Scoreboard for the Czech Republic

Indicator

Unit

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

555.03

527.55

550.08

587.91

589.68

610.79

621.39

652.59

702.81

725.63

Outstanding business loans, total

EUR billion

850.76

784.07

783.54

831.21

840.59

871.58

890.23

935.36

994.86

1036.1

Share of SME outstanding loans

% of total outstanding business loans

65.24

67.28

70.20

70.73

70.15

70.08

69.80

69.77

70.64

70.03

New business lending, total

EUR billion

866.11

780.87

667.98

599.09

694.94

500.50

544.73

607.59

510.58

457.94

New business lending, SMEs

EUR billion

207.24

147.74

123.40

124.12

129.83

86.66

97.76

118.28

100.46

101.24

Share of new SME lending

% of total new lending

23.93

18.92

18.47

20.72

18.68

17.31

17.95

19.46

19.68

22.11

New short-term loans, SMEs

EUR million

73 626

72 433

77 853

45 531

40 360

41 742

36 974

33 918

New long-term loans, SMEs

EUR million

49 772

51 684

51 977

41 129

57 404

76 475

63 490

67 325

Share of short-term SME lending

% of total SME lending

59.67

58.36

59.97

52.54

41.28

35.31

36.80

33.50

Government loan guarantees, SMEs

EUR million

3 529

6 369

6 593

472

1 534

3 251

4 010

6 913

3 530

4 014

Government guaranteed loans, SMEs

EUR million

5 094

9 550

10 070

630

2 215

4 616

5 771

9 947

5 055

5 758

Direct government loans, SMEs

EUR million

286

209

629

1 090

782

101

86

65

7

291

Non-performing loans, total

EUR million

35 340

61 904

70 166

67 876

61 480

62 032

58 694

52 677

50 307

43 225

Interest rate, SMEs

%

5.57

4.64

4.01

3.73

3.48

3.13

3.76

2.70

2.50

2.50

Interest rate, large firms

%

4.84

3.46

3.34

2.63

2.43

1.89

2.00

1.80

1.80

1.90

Interest rate spread

% points

0.73

1.18

0.67

1.10

1.05

1.24

1.76

0.90

0.70

0.60

Non-bank finance

Venture and growth capital

EUR million

1046

220

51

18

9

20

35

10

9

11

Venture and growth capital (growth rate)

%, Year-on-year growth rate

111.24

-31.16

-87.91

-48.09

114.83

71.45

-70.20

-9.99

19.19

Other indicators

Payment delays, B2B

Number of days

18.00

19.00

14.00

14.00

15.00

14.00

14.00

14.00

19.00

16.00

Bankruptcies, SMEs

Number

873

1 280

1 301

1263

1345

1379

1228

1001

904

769

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

46.62

1.64

-2.92

6.49

2.53

-10.95

-18.49

-9.69

-14.93

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

11. Denmark

In 2016, not counting non-employer enterprises, SMEs accounted for 98.2% of all enterprises in Denmark.

SME lending suffered disproportionately in the aftermath of the financial crisis. The share of new business lending to SMEs relative to total new business lending declined from 12% in 2007 to 9% in 2009. In 2017, the share of SME lending stood at 10%, which was low by international standards. New lending to SMEs remained stable between 2016 and 2017, after having decreased 34% between 2015 and 2016.

Survey data illustrates that credit conditions in Denmark have become much more favourable since 2011, when almost 40% of SMEs described their financial conditions as bad. In spite of a slight increase since December 2016, only 17% of SMEs described their financial conditions as bad in December 2017. The demand for new small enterprise loans continuously increased between the first quarter of 2015 and the first quarter of 2018, and overall credit demand for small enterprise loans steadily increased since the first quarter of 2015, with only a few exceptions.

SME interest rates have decreased from an average of 6.6% in 2008, to 2.5% in 2017. Since interest rates for large enterprises declined even more during this period, the interest rate spread between small and large firms widened from 0.9% in 2008 to 2% in 2013. Since then, however, the spread has consistently decreased, reaching 1.3% in 2017.

Due to a sharp increase in growth capital investments, total venture and growth capital investments increased 78% over 2016-17, reaching their highest level to date after having decreased 13% between 2015 and 2016.

Payment delays declined from 4 days in 2016 to 2 days in 2017, continuing their downward trend since 2012. The number of bankruptcies was stable between 2016 and 2017, after having increased 40% between 2014 and 2016. Regardless, the prevalence of bankruptcy remains significantly below the levels observed in 2009 and 2010.

Vækstfonden (The Danish Growth Fund) is a government backed investment fund that was created in 1992. Vækstfonden offers guarantees and loans to established SMEs and entrepreneurs, invests equity in young companies with growth potential, and engages in fund-of-funds activities by investing in venture and small/mid-cap funds. In 2013, Vækstfonden introduced new direct loans for SMEs and merged its previously entrepreneur-focused loan scheme with its credit guarantee programme.

The amount of government loan guarantees and government guaranteed loans have developed in opposite directions between 2012 and 2017. Government loan guarantees issued to SMEs decreased from a total loan amount of DKK 1 222 million in 2012, to DKK 514 million in 2017. The amount of government guaranteed loans on the other hand increased from DKK 61 million in 2012 to DKK 1 377 million 2017.

Table 11.1. Scoreboard of Denmark

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, total

DKK billion

732

809

814

812

809

830

860

914

940

989

1 033

New business lending, total

DKK billion

332

385

318

313

292

241

303

474

519

508

521

New business lending, SMEs

DKK billion

41

35

28

35

34

39

37

55

73

51

52

Share of new SME lending

% of total new lending

12.3

9.1

9.0

11.2

11.7

16.3

12.1

11.5

14.1

10.1

10.1

New short-term loans, SMEs

DKK billion

26

26

22

23

24

20

22

34

35

31

29

New long-term loans, SMEs

DKK billion

14

9

6

23

10

19

15

21

38

21

23

Share of short-term SME lending

% of total SME lending

65.00

74.29

78.57

50.00

70.59

51.28

59.46

61.82

47.95

59.62

55.77

Government loan guarantees, SMEs

DKK million

210

178

209

769

1 192

1 222

783

658

668

620

514

Government guaranteed loans, SMEs

DKK million

..

..

..

..

17

61

286

746

1 076

1 257

1 377

Interest rate, SMEs

%

5.97

6.59

5.33

4.39

4.38

3.91

3.78

3.44

2.99

2.74

2.49

Interest rate, large firms

%

5.23

5.68

3.63

2.49

2.40

2.14

1.73

1.65

1.53

1.34

1.23

Interest rate spread

% points

0.75

0.91

1.70

1.90

1.97

1.77

2.04

1.79

1.45

1.40

1.26

Non-bank finance

Venture and growth capital

DKK million

263

205

179

282

186

270

241

224

346

301

537

Venture and growth capital (growth rate)

%. Year-on-year growth rate

..

-22.3

-12.4

57.4

-34.0

45.1

-10.8

-7.1

54.4

-12.9

78.2

Other indicators

Payment delays, B2B

Number of days

7.2

6.1

12.0

12.0

13.0

12.0

10.0

9.0

4.0

4.0

2.0

Bankruptcies, SMEs

Number

..

..

2 563

2 583

1 938

1 958

1 698

1 328

1 584

1 853

1 888

Bankruptcies, SMEs (growth rate)

%. Year-on-year growth rate

..

..

..

0.78

-24.97

1.03

-13.28

-21.79

19.28

16.98

1.89

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

12. Estonia

In 2016, Estonian SMEs employed 78% of the workforce and accounted for 75.7% of total value added. 90.5% of all firms were micro-enterprises, i.e. firms with less than 10 employees, employing 30% of the workforce and accounting for 26.2% of total value added in 2016.

Lending to Estonian SMEs contracted significantly in the aftermath of the financial crisis, with new SME loans almost halving from EUR 3.6 billion in 2007 to EUR 1.9 billion in 2010. Following the rebound of the Estonian economy, new SME lending began to slowly pick up again after 2011, but remained below pre-crisis levels in 2017, as was the case for outstanding SME loans. Under the Estonian corporate income tax system, all reinvested profits are tax-free. Thus, companies have incentives to reinvest their profits, which may be an explanation for low demand for loans.

The base interest rate on SME loans up to EUR 1 million decreased steadily from 4% in 2012 to slightly below 3% in 2016. For larger loans, the interest rate declined from 3% to 2.1% over the same period. In 2017, both interest rates slightly increased to 2.99% (SME loans) and 2.12% (large company loans).

Venture and growth capital peaked in 2007 and 2008, and fell sharply in the following years, reaching a low in 2011. VC trends in Estonia have broadly followed VC trends of other European countries. In 2016, venture capital investments increased 250%, reaching their highest level ever.

Both new leasing and the outstanding leasing stock declined sharply between 2008 and 2009, and only recovered somewhat in 2011. While the total outstanding factoring stock remained quite stable in recent years, factoring flows grew considerably and more than doubled between 2009 and 2017, from EUR 909.3 million to EUR 2 090.4 million.

Payment delays, bankruptcies and non-performing loans increased sharply in the aftermath of the financial crisis, peaking in 2009-10, but began to level off post-2010. In 2017, payment delays continued to drop below their 2007 pre-crisis level; data shows a marked and continuous decline in payment delays since 2010. In 2017, non-performing loans amounted to a 1.9% share of total SME loans (more than four times lower than its peak in 2010), while SME bankruptcies increased by 2% year-on-year.

The Estonian government provides loan guarantees to all types of companies. Government loan guarantee volumes have been much higher in recent years than in the past (especially over 2007-08), but have overall followed an erratic pattern since 2009. In 2015, government loan guarantees to SMEs amounted to EUR 65.6 million. In 2016, government loan guarantees to SMEs increased by 42.5%, but have since decreased by 35.5% to 60.9 million in 2017. Big movements in 2016 were due to high demand for this kind of services.

EstFund is a fund of funds, set up in 2016 by the Estonian Government and the European Investment Fund that aims to increase venture capital investments in Estonian SMEs. EstFund invests EUR 60 million into venture capital funds in total, which can be complemented by private investments of up to EUR 40 million. Investments began at the end of 2017 and in the summer of 2018 two more funds were added to the programme.

Table 12.1. Scoreboard for Estonia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

2.44

2.49

2.13

1.90

1.68

1.61

1.65

1.70

1.67

1.71

1.81

Outstanding business loans, total

EUR billion

6.80

7.20

6.86

6.46

5.95

6.15

6.25

6.44

6.80

7.34

6.93

Share of SME outstanding loans

% of total outstanding business loans

35.83

34.55

31.01

29.37

28.28

26.24

26.45

26.40

24.56

23.23

26.1

New business lending, total

EUR billion

8.55

7.31

4.46

4.26

5.06

5.61

6.17

6.41

6.68

6.99

7.19

New business lending, SMEs

EUR billion

3.60

3.52

2.13

1.87

1.96

2.12

2.37

2.46

2.25

2.37

2.55

Share of new SME lending

% of total new lending

42.09

48.21

47.70

43.82

38.63

37.80

38.43

38.42

33.73

33.84

35.5

Short-term loans, SMEs

EUR million

480.53

475.13

377.13

317.84

325.92

302.35

317.41

333.41

300.81

314.86

320.18

Long-term loans, SMEs

EUR billion

1.96

2.01

1.75

1.58

1.36

1.31

1.34

1.37

1.37

1.39

1.49

Share of short-term SME lending

% of total SME lending

19.73

19.09

17.74

16.76

19.39

18.74

19.20

19.62

18.00

18.46

17.7

Government loan guarantees, SMEs

EUR million

15

23

52

66

53

60

52

66

66

93

61

Government guaranteed loans, SMEs

EUR million

27

39

86

122

116

122

100

111

112

171

100

Non-performing loans, total

% of all business loans

0.61

3.71

8.76

8.53

5.91

3.79

2.01

1.97

1.56

1.62

1.35

Non-performing loans, SMEs

% of all SME loans

0.95

3.59

7.36

8.17

6.31

5.18

3.27

2.96

2.79

2.88

1.94

Interest rate, SMEs

%

6.11

6.71

5.34

5.06

4.92

4.02

3.41

3.36

3.04

2.96

2.99

Interest rate, large firms

%

5.68

6.13

4.21

3.90

3.76

3.05

2.86

2.68

2.05

2.08

2.12

Interest rate spread

% points

0.43

0.58

1.14

1.16

1.16

0.98

0.56

0.68

0.99

0.88

0.87

Non-bank finance

Venture and growth capital

EUR million

..

4.74

4.51

17.75

5.53

16.60

10.90

48.20

14.00

49.00

..

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

- 5.00

293.72

- 68.84

200.24

- 34.34

342.20

- 70.95

250.00

..

Leasing and hire purchases

EUR million

891.17

709.63

222.77

281.29

519.37

649.60

545.75

537.16

542.69

676.13

718.45

Factoring and invoicing

EUR billion

1.29

1.41

0.99

0.91

1.13

1.92

1.98

2.09

2.24

2.09

2.29

Other indicators

Payment delays, B2B

Number of days

9

8.1

12.7

12.8

10.2

10.1

9.4

7

6.9

6

5.5

Bankruptcies, SMEs

Number

202

423

1055

1028

623

495

459

428

376

335

343

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

109.41

149.41

- 2.56

- 39.40

- 20.55

- 7.27

- 6.75

- 12.15

- 10.90

2.39

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

13. Finland

In Finland, 99.3% of all employer firms were SMEs in 2017, employing 63.2% of the labour force. The number of employer firms decreased from 2013 to 2015, indicating that some employers have switched to self-employed status due to diminished demand for their products and services.

New SME lending continued its expansion for the third year in a row, from EUR 8 444 million in 2015 to EUR 9 607 million in 2017. The share of new SME lending as a percentage of total new lending also increased in 2017.

Interest rates for both SMEs and large firms, as well as the interest rate spread between SMEs and large firms, stagnated in 2016-17. 34% of SMEs required collateral to obtain bank financing in 2016, down from 38% in 2015. The loan rejection rate was 7% in 2017.

Although the amount of venture capital investments slightly decreased in 2017, investment activity in Finland was still relatively high considering the average amount invested in the reference period 2007-17.

Average payment delays in Finland were historically low, compared to other countries before the crisis. Finnish firms have a strong payment discipline, which they also maintained during and after the financial crisis.

The number of bankruptcies filed by SMEs in Finland fell for the fourth year in a row. 2 160 SMEs filed for bankruptcy in 2017, the lowest figure in the reference period.

Finnvera is a financing company owned by the government of Finland and the country’s official export credit agency. Finnvera provides financing for the start-up, growth and internationalisation of enterprises, as well as guarantees against risks arising from exports. In 2015-16, a few improvements relating to SME financing granted by Finnvera were introduced. Because of the increased compensation of possible credit and guarantee losses, Finnvera was able to increase its risk-absorption capacity.

The Finnish economy experienced an upswing in 2016-17. According to the Ministry of Finance, GDP growth was 2.6% in 2017 and is expected to increase to 2.9% in 2018. This economic upswing has also increased demand for SME finance as can be observed from the most recent Banking Barometers provided by Finance Finland.

Table 13.1. Scoreboard for Finland

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, total

EUR billion

48.4

57.6

54.1

56.5

60.4

63.3

66.7

68.4

72.5

76.0

78.1

New business lending, total

EUR billion

42.7

54.4

50.9

54.4

37.4

34.9

39.5

35.6

35.0

36.4

37.1

New business lending, SMEs

EUR billion

11.6

11.9

9.9

8.3

7.9

7.7

7.3

6.8

8.4

9.1

9.6

Share of new SME lending

% of total new lending

27.11

21.85

19.56

15.25

21.11

22.23

18.55

19.21

24.14

24.92

25.90

Short-term loans, SMEs

EUR million

..

..

..

839

1 615

1 613

1 312

1 250

1 655

1 864

2 046

Long-term loans, SMEs

EUR million

..

..

..

3 314

6 287

6 136

6 018

5 583

6 789

7 219

7 561

Share of short-term SME lending

% of total SME lending

..

..

..

20.20

20.44

20.82

17.90

18.29

19.60

20.52

21.30

Government loan guarantees, SMEs

EUR million

416

438

474

447

497

408

379

476

522

570

540

Direct government loans, SMEs

EUR million

385

468

593

397

369

342

284

287

385

275

241

Non-performing loans, total

% of all business loans

..

..

..

..

..

..

..

..

4.07

3.07

2.68

Non-performing loans, total (amount)

EUR million

..

..

..

..

..

..

..

..

1 423

1 119

994

Interest rate, SMEs

%

5.39

5.58

3.02

2.66

3.23

2.86

2.81

2.94

2.96

2.76

2.75

Interest rate, large firms

%

4.83

5.08

2.24

1.86

2.59

2.07

1.91

1.92

1.46

1.33

1.35

Interest rate spread

% points

0.56

0.50

0.78

0.80

0.64

0.79

0.90

1.02

1.50

1.43

1.40

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

33

34

35

41

41

38

35

34

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

13.85

18.42

20.79

21.50

21.85

27.70

21.97

23.89

19.99

Rejection rate

1-(SME loans authorised/ requested)

..

..

6.98

4.92

3.12

8.08

7.06

6.71

6.24

5.59

6.76

Non-bank finance

Venture and growth capital

EUR million

189

218

146

351

148

185

173

168

190

219

203

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

15.3

-33.0

140.4

-57.8

25.0

-6.5

-2.9

13.1

15.3

-7.3

Leasing and hire purchases

EUR million

..

..

1 067

1 361

1 566

1 765

1 658

1 858

..

..

..

Other indicators

Payment delays, B2B

Number of days

6

5

7

7

7

7

6

6

5

5

5

Bankruptcies, SMEs

Number

2 254

2 612

3 275

2 864

2 947

2 961

3 131

2 986

2 574

2 408

2 160

Bankruptcies, SMEs (growth rate)

%, year-on-year growth rate

..

15.9

25.4

-12.5

2.9

0.5

5.7

-4.6

-13.8

-6.4

-10.3

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

14. France

France has approximately 3.8 million small and medium enterprises (SMEs). They account for 99.9% of all enterprises.

Outstanding SME loans increased by more than 4.5% between 2016 and 2017, reaching EUR 244 094 million in 2017. Since 2014, the spread between interest rates charged to SMEs and to large firms has steadily decreased. Furthermore, SMEs’ access to bank lending remains high: 86% of SMEs' requests for cash credits were fully or almost fully granted, while 95% of SMEs requests for investment loans were fully or almost fully served.

Private equity investments in French firms increased sharply in 2017, to EUR 14.3 billion, + 15% compared to 2016. The consolidation of private equity investments in SMEs has been confirmed for all segments of private equity in 2017 compared to 2016, with the exception of expansion capital.

Factoring has continuously increased in France since 2009.

Payment delays reached 13.3 days in 2015, the highest figure since the crisis, and then decreased steadily in 2016 and 2017 to 11 days.

For the second time since the financial crisis, the number of SME bankruptcies dipped below 60 000.

In terms of government policies responding to the financing constraints faced by SMEs, in 2017, credit mediation assisted 909 enterprises, unblocking a total of EUR 193 million of credit. However, the number of requests has decreased in comparison with previous years, partly due to the better dynamism of economic growth, as well as to the overall global easing of access to bank financing.

The Government is also involved in reducing business-to-business payment delays. The transparency, anti-corruption and economic modernisation law enacted in December 2016 strengthens the legislative framework to fight against business-to-business payment delays. The maximum fine for firms that do not respect legal payment delays has been raised to two million. Moreover, a procedure known as “name and shame" has been introduced. Henceforth, there is a systematic advertising of fines decisions on the website of the Ministry of Economy and Finance. As a result, in 2017, 230 fine procedures have been launched, representing nearly EUR 14.7 million, and 23 have been published on the website of the Ministry of Economy and Finance.

Better access to financing for very small firms has also been the focus of public action. Since 2016, Bpifrance has distributed online development loans to address the investment financing needs of firms from 3 to 50 employees with tangible and intangible investment projects. This measure, implemented in some regions, is being expanded. In addition, the Banque de France set up a network of correspondents in every region since 2016 to break the isolation of entrepreneurs and to solve financing issues.

Table 14.1. Scoreboard for France

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

180.6

189.1

189.6

199.7

210.3

214.1

216.6

219.3

224.3

233.0

244.1

Outstanding business loans, total

EUR billion

868.8

927.4

938.8

974.4

1012.6

1009.9

1026.0

1036.1

1078.2

1130.1

1193.3

Share of SME outstanding loans

% of total outstanding business loans

20.8

20.4

20.2

20.5

20.8

21.2

21.1

21.2

20.8

20.6

20.5

New business lending, total

EUR billion

86.4

67.6

-9.5

9.1

34.6

7.8

1.6

18.9

35.0

43.8

56.1

Outstanding short-term loans, SMEs

EUR billion

43.1

42.7

37.5

38.1

40.3

41.1

42.8

43.3

43.6

43.9

44.8

Outstanding long-term loans, SMEs

EUR billion

115

123

128

134

143

147

146

149

152

159

167

Share of short-term SME lending

% of total SME lending

27.2

25.7

22.7

22.1

22.0

21.9

22.6

22.6

22.3

21.7

21.1

Government loan guarantees, SMEs

EUR billion

5.9

6.9

11.3

11.9

9.8

8.5

8.9

7.8

8.0

8.4

8.9

Government guaranteed loans, SMEs

EUR billion

2.7

3.2

5.8

5.3

4.2

4.2

4.4

4.8

5.0

5.2

5.1

Non-performing loans, total

% of all business loans

3.7

3.7

4.7

4.6

4.0

4.1

4.3

4.1

4.1

3.9

3.6

Interest rate, SMEs

%

5.1

5.4

2.9

2.5

3.1

2.4

2.2

2.1

1.8

1.5

1.4

Interest rate, large firms

%

4.5

4.8

2.0

1.6

2.2

1.7

1.5

1.3

1.2

1.1

1.1

Interest rate spread

% points

0.6

0.7

0.9

0.9

0.9

0.7

0.7

0.8

0.6

0.4

0.3

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

9.4

8.5

7.3

6.3

5.2

4.4

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

..

38.4

35.6

35.7

37.9

37.9

37.1

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

..

11.12

8.00

6.61

7.55

6.21

Utilisation rate

SME loans used/ authorised

87.7

87.8

87.2

86.4

87.0

87.6

87.3

87.5

87.2

87.0

86.8

Non-bank finance

Venture and growth capital

EUR billion

2.0

2.4

2.4

2.9

3.5

2.4

2.5

3.2

4.6

4.7

4.4

Venture and growth capital (growth rate)

%, Year-on-year growth rate

24.73

21.34

-1.08

22.22

21.34

-32.5

3.35

30.98

42.55

2.54

-7.38

Leasing and hire purchases

EUR billion

9.3

9.5

9.0

8.5

8.1

6.6

6.1

5.7

7.1

7.7

7.8

Factoring and invoice discounting

EUR billion

21.2

22.5

18.8

20.7

22.5

22.6

24.8

25.6

28.0

31.0

36.6

Other indicators

Payment delays, B2B

Number of days

12.18

11.90

11.80

11.98

12.18

11.83

12.08

12.21

13.28

11.90

11.04

Bankruptcies, SMEs

Number

51 301

55 524

63 163

60 298

59 451

61 066

62 507

62 371

62 984

57 922

54 555

Bankruptcies, SMEs (growth rate)

%, year-on-year growth rate

 

8.23

13.76

-4.54

-1.40

2.72

2.36

-0.22

0.98

-8.04

-5.81

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

15. Georgia

In 2016, pursuant to the National Strategy of SME Development, the Georgian National Statistics office introduced a new methodology and definitions to calculate statistics on the country’s SMEs.

According to the new methodology, in 2017, 99.72% of all firms in Georgia were SMEs, and accounted for 64% of total private employment, 56.1% of total business sector turnover and 58.7% of production value. These empirical findings illustrate Georgia’s economic dependence on small and medium companies.

In line with the recent economic expansion, credit to SMEs rose significantly year over year between 2010 and 2017 by more than 270%. Throughout that period, total business loans grew more than 212%, and the proportion of SME loans as a percentage of total business loans grew from 36.4% to 43.1%, a high point over the period.

The average interest rate charged to SMEs in Georgia is high by OECD standards, but has significantly declined in recent years, from 16.5% in 2010 to 10.36% in 2017. Compared to 2016, average interest rates increased slightly, by 45 basis points in 2017. Concomitantly, during the same period, the interest rate spread between large enterprises and SMEs grew to only 0.92%.

Although exact data on the availability and use of alternative financial instruments is lacking, available evidence strongly suggests that Georgian SMEs are very dependent on the banking sector for meeting their financing needs and that non-bank instruments play a very marginal role.

According to the World Bank Group's Doing Business indicator, Georgia improved its “ease of doing business” in 2017 moving from 16th to 9th position and in 2018 from 9th to 6th. According to Doing Business, Georgia implemented substantive changes in the local regulatory framework from 2016 to 2018. Most notably, the country improved its performance resolving insolvencies, by making insolvency proceedings more accessible for debtors and creditors, improving provisions on the treatment of contracts during insolvency, and granting creditors greater participation in important decisions during the proceedings. As a result, enterprise liquidation and bankruptcy procedures increased more than 28% in 2017 reaching 293 in total. Moreover, the country simplified business registration procedures, the tax system, and the enforcement of contracts.

In 2017, the overall volume of non-performing SME loans exceeded GEL 221 million, the highest level since 2010, while the share of non-performing SMEs loans decreased to 4.3%, the second lowest level since 2010. The lowest level was reached in 2014 when the share of non-performing SMEs loans was 4.2%.

To promote SME development and support SMEs’ competitive growth, the Ministry of Economy and Sustainable Development of Georgia (MoESD) established Enterprise Georgia and Georgia’s Innovation and Technology Agency. Both agencies provide financial support to SMEs, as well as a broader range of services that includes mentoring, trainings and various advisory services.

In addition to the establishment of these two agencies, the government of Georgia has introduced several private sector development programmes, which include financial and technical assistance components to support small and medium companies at different stages of development.

Table 15.1. Scoreboard for Georgia

Indicators

Units

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Business loans, SME

GEL million

..

..

1 400

1 548

1 738

2 051

2 422

3 621

3 992

5 176

Business loans, total

GEL million

3 458

3 097

3 843

4 501

4 989

5 663

6 715

8 433

10 500

12 000

Business loans, SMEs

% of total business loans

..

..

36.4

34.4

34.8

36.2

36.1

42.9

38.0

43.1

Non-Performing Loans, total

GEL million

766

926

784

667

810

791

988

1 200

1 380

1 337

Non-performing loans, SMEs

GEL million

..

..

144

134

111

102

101

161

206

221

Non-performing loans, total

% of all business loans

16.1

11.5

12.2

10.7

10.6

9.8

10.1

7.7

Non-performing loans, SMEs

% of total SME loans

..

..

10.3

8.7

6.4

5

4.2

4.4

5.2

4.3

Interest rate, SME

%

..

..

16.50

15.50

14.50

11.60

10.70

12.70

9.70

10.36

Interest rate, large firms

%

..

..

13.60

14.10

12.80

11.20

10.00

11.40

9.90

9.30

Interest rate spread

..

..

2.90

1.40

1.70

0.40

0.70

1.30

-0.20

1.06

Collateral, SMEs

%

..

..

..

..

..

95.6

..

..

Rejection rate

%

..

..

..

..

..

4.6

..

..

Utilization rate

%

..

..

..

..

..

95.4

..

..

Procedures of enterprises' liquidation (incl. bankruptcy)

Number

61

52

2 094

3 176

2 524

1 775

1 785

1 560

229

293

Procedures of enterprises' liquidation (incl. bankruptcy)

Year-on-year growth rate

-48.74

-14.75

3 926.92

51.67

-20.53

-29.68

0.56

-12.61

-85.3%

28%

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

16. Greece

99.9% of Greek enterprises are SMEs, and the majority of SMEs are micro-enterprises. On average, micro-enterprises contribute more to employment and add more value in Greece than in other European countries.

The financial crisis and the ensuing sovereign debt crisis has had a profound impact on the Greek economy since 2010.

Bank funding dried up for Greek SMEs in the aftermath of the financial crisis. In 2009, new lending shrank more than a tenfold from 2007 and 2008 levels. Although lending to SMEs recovered somewhat in 2010, data show a clear downward path in SME lending over the 2011-16 period. In 2016, new loans to SMEs more than halved compared to 2014. In 2017, however, SME lending slightly increased, following a 7-year period of consistent decline. Nevertheless, SME lending volumes were still far below their 2008-09 levels.

The SME interest rate has decreased in recent years, but remains much higher compared to other Eurozone economies, illustrating that the accommodative stance of the European Central Bank (ECB) had relatively little impact on Greek SMEs. The interest rate spread between SMEs and large firms increased in 2016 compared to the low point of 2014, but remained stable in 2017, as the reduction of large firms’ interest rate was more important than the reduction of SME interest rates during this period (2014-2017).

Leasing and hire purchases also decreased severely as a result of the economic crisis and remained well below pre-crisis levels in 2017. By contrast, factoring and invoice discounting activities have remained relatively stable over 2007-16, and have increased since 2014.

The Greek Government operates a number of loan guarantee programmes. These programmes gained pace between 2010 and 2011, but the sovereign debt crisis prevented Greece from continuing such support in 2012. As a result, loan guarantees declined 50% that year, and have continued to decline ever since. Various actions were announced by the Greek Government in 2017, such as the establishment of the Intermediate Entrepreneurship Fund and the Western Macedonian’s Regional Development Fund. These funds complement The Entrepreneurship Fund II and The Energy Saving Fund II established in 2016, which use European Structural Investment Funds and national financial sources, as well as programmes for the provision of short-term and long-term export credit insurance to SMEs.

The government also supports equity financing through minority participation in venture capital funds, venture capital companies, and similar vehicles. Additionally, the Greek Government, with the cooperation of the European Investment Fund, announced the launch of EquiFund in 2016, a private equity fund that will invest in high value-added and innovative early and growth stage companies.

Finally, various legislative actions continue to be taken by the government with the cooperation of the Central Bank of Greece to address the serious increase of non-performing loans (NPLs) among Greek SMEs.

In 2019, the Greek Government will proceed with the establishment of the Hellenic Development Bank (HDB), which will take place through the transformation and administrative capacity building of two existing entities, the Hellenic Fund for Entrepreneurship and Development S.A. (ETEAN S.A.) and its subsidiary, the New Economy Development Fund S.A. (TANEO SA). HDB’s scope will be to improve SMEs’ access to finance, to foster innovation, to facilitate investments in infrastructure, to encourage equity investments and other alternative financing sources and to provide business support to SMEs, mainly through shared-risk loans and guarantee facilities, as well as financial expertise to the public sector. The first phase of transformation will be completed within Q1 2019, with the adoption of the new legal framework. The second phase, during which HDB will be implemented, will be completed by the end of 2019. HDB will deploy a list of new products worth approximately EUR 5 billion (public and private funds) within the next five years and fulfill its scope of establishment, by targeting projects that will have an impact on sustainable growth, regional development, job creation and investments, while at the same time being financially autonomous and sustainable.

Table 16.1. Scoreboard for Greece

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

..

..

..

44.9

41.6

39.1

48.1

48.1

46.9

48.4

44.7

Outstanding business loans, total

EUR billion

102

124

124

117

113

101

97

95

89

88

82

Share of SME outstanding loans

% of total outstanding business loans

..

..

..

38.5

36.8

38.8

49.7

50.6

52.6

55.3

54.4

New business lending, total

EUR Billion ('000 000 000)

..

36.5

36.3

20.7

29.4

21.8

24.3

14.9

6.9

5.8

7.3

New business lending, SMEs

EUR billion

..

12.5

13.0

4.4

5.2

4.1

3.7

2.3

1.2

1.1

1.1

Share of new SME lending

% of total new lending

..

34.2

35.6

21.4

17.8

18.9

15.0

15.6

17.0

18.4

15.5

Outstanding short-term loans, SMEs

EUR billion

..

..

..

..

..

..

..

18.1

17.6

18.8

17.0

Outstanding long-term loans, SMEs

EUR billion

..

..

..

..

..

..

..

30.1

29.3

29.6

27.7

Share of short-term SME lending

% of total SME lending

..

..

..

..

..

..

..

37.6

37.6

38.9

38.0

Government loan guarantees, SMEs

EUR billion

..

..

..

..

..

..

0.37

0.31

0.24

0.56

1.08

Non-performing loans, total

% of all business loans

4.60

4.30

6.70

8.70

14.2

23.4

31.8

29.4

31.0

30.3

30.5

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

..

..

41.2

44.1

43.2

..

Interest rate, SMEs

%

6.57

6.82

4.62

5.53

6.77

6.87

6.51

5.80

5.38

5.32

4.91

Interest rate, large firms

%

5.32

5.71

3.52

4.27

5.74

5.92

5.77

5.55

4.82

4.61

4.20

Interest rate spread

% points

1.25

1.11

1.10

1.26

1.03

0.95

0.74

0.25

0.56

0.71

0.71

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

51.4

40.5

49.4

46.7

45.9

46.2

49.2

39.8

25.7

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

37.9

39.6

30.8

29.9

21.4

25.5

18.8

21.5

17.5

Rejection rate

1-(SME loans authorised/ requested)

..

..

25.8

24.5

33.8

28.3

26.0

21.5

19.9

18.2

16.2

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

..

..

..

..

..

Non-bank finance

Venture and growth capital

EUR million

19.0

32.7

16.7

25.0

10.1

..

4.8

12.6

36.8

38.0

44.5

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

72

-49

50

-60

..

..

160

193

3

17

Leasing and hire purchases

EUR billion

7.28

7.87

7.50

7.28

6.85

6.22

3.36

4.08

4.72

4.40

4.25

Factoring and invoice discounting

EUR billion

1.28

1.73

1.77

1.73

1.49

1.53

1.41

1.69

1.69

1.72

1.74

Other indicators

Payment delays, B2B

Number of days

..

25

34

30

35

40

43

41

36

47

.

Bankruptcies, SMEs

Number

513

359

355

355

445

415

392

330

189

108

123

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

-30

-1

0

25

-7

-6

-16

-43

-43

14

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

17. Hungary

Bank lending to the corporate sector expanded in 2017, by 10% for all companies, and by 12% for SMEs. Banking competition intensified, accompanied by an improvement in economic prospects and an easing of credit terms. Banks surpassed their commitments to boost lending to SMEs made under the Market-Based Lending Scheme, and have fully maintained these commitments for the most part during 2018. 

The Market-Based Lending scheme is implemented since 2016 and consists in the following programmes:

  • Supplementing the central bank instruments with an interest rate swap conditional on lending activity (LIRS) and a preferential deposit facility. The total amount allocated to LIRS is HUF 1,000 billion, and banks can access the programme if they increase their stock of (performing) loans to SMEs by one-quarter of the allocated amount annually, i.e. by HUF 250 billion. The preferential deposit facility is a supplementary instrument, under which banks will be able to place part of their liquidity in excess of the amount of required reserves on their current accounts at the Bank’s policy rate.

  • Creating incentives through capital adequacy requirements for banks: when a bank is considering providing long-term lending to SMEs, applying a lower supervisory capital requirement may be considered. The precise conditions may be finalised after consultations with the banking sector.

  • Providing the banking sector with an access to the corporate credit reporting system: the development of a corporate credit reporting system is underway at the MNB, which may be an efficient tool for banks in mapping out credit risks as precisely as possible.

Based on banks' responses to the Lending Survey, credit conditions eased for both SMEs and large firms in the fourth quarter of 2017 and the interest rate spread fell. Based on credit institutions' responses to the Lending Survey, there was a growth in credit demand in both the large corporate and the SME segments. Looking ahead, banks anticipate that demand for credit, and particularly long term credit will grow.

Garantiqa Ltd. Continued to play a key role in assisting SMEs obtain financing. An important objective of their 2017 business plan was to increase the availability of counter-guarantee options. In Q4 2017, Garantiqa Ltd. introduced the COSME LGF guarantee programme in cooperation with EIF, in order to stimulate development loans, improve access to credit by SMEs (especially those excluded from grant schemes due to grant restrictions), and finance start-ups. Under this agreement, Garantiqa will provide guarantees for HUF 80 billion worth of loans through its 50% counter-guarantee. This represents financing opportunities for some 3 500 Hungarian enterprises.

Table 17.1. Scoreboard for Hungary

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

HUF billion

5 280

5 823

5 379

4 783

4 797

5 014

5 064

4 831

4 942

4 889

4 518

Outstanding business loans, total

HUF billion

8 466

9 613

8 959

8 770

8 825

7 892

7 648

7 761

7 355

7 073

7 881

Share of SME outstanding loans

% of total outstanding business loans

62.36

60.58

60.05

54.54

54.36

63.53

66.21

62.25

67.20

69.13

57.33

New business lending, SMEs

HUF billion

3 851

4 384

3 660

3 531

3 585

3 870

4 662

4 302

3 665

4 187

4 355

Short-term loans, SMEs

HUF billion

2 473

2 966

2 832

2 775

2 767

3 052

2 654

2 570

2 424

2 708

2 798

Long-term loans, SMEs

HUF billion

1 377

1 418

828

756

818

818

2 008

1 732

1 241

1 478

1 557

Share of short-term SME lending

% of total SME lending

64.23

67.66

77.37

78.59

77.18

78.86

56.93

59.75

66.14

64.69

64.25

Government loan guarantees, SMEs

HUF billion

308

352

409

377

343

251

350

346

348

469

601

Government guaranteed loans, SMEs

HUF billion

381

436

600

472

437

314

458

434

429

569

731

Non-performing loans, total (amount)

HUF billion

..

..

..

832

1 155

1 272

1 124

961

697

577

498

Non-performing loans, total

% of all business loans

3.10

4.70

10.10

12.8

17.4

17.7

16.1

13.7

9.6

5.4

3.3

Non-performing loans, SMEs

% of all SME loans

 

5.40

8.90

12.8

15.9

20.5

18.6

20.7

13.7

6.3

4.4

Interest rate, SMEs

%

10.19

11.25

12.31

8.99

9.38

9.7

7.4

5.1

4.7

4.2

3.3

Interest rate, large firms

%

8.97

10.28

11.07

..

..

8.9

5.9

4.1

2.4

2.8

1.8

Interest rate spread

% points

1.22

0.97

1.24

..

..

0.80

1.50

1.00

2.30

1.40

1.50

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

..

..

71

64.5

60.1

53.4

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

..

..

68.8

67

84.4

71.6

49.2

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

81.5

..

..

..

..

Non-bank finance

Venture and growth capital

HUF million

3 949

13 782

720

6 982

11 308

19 361

15 880

18 759

27 742

12 070

11 470

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

249.00

-94.78

869.72

61.96

71.22

-17.98

18.13

47.89

-56.49

-4.97

Leasing and hire purchases

HUF million

..

..

..

..

..

..

..

..

..

274 766

243 743

Factoring and invoicing

HUF million

..

..

..

..

..

..

..

..

..

126 038

25 951

Other indicators

Payment delays, B2B

Number of days

16.30

19.00

19.00

15.00

22.00

20.00

..

17.40

17.40

..

..

Bankruptcies, total

Number

153

168

212

232

279

301

376

644

488

377

322

Bankruptcies, total (growth rate)

%, Year-on-year growth rate

..

10.35

25.65

9.5

20.4

7.9

24.7

71.3

-24.2

-22.9

-14.4

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

18. Indonesia

In Indonesia, SMEs consist of micro, small and medium-sized enterprises with up to IDR 10 billion of assets, or a maximum turnover of IDR 50 billion, as defined by the Law of Republic of Indonesia 20/2008 Based on that definition, 99.99% of enterprises were SMEs in 2017 (62 922 617 SMEs compared to 5 460 large enterprises in 20173).).

Due to different methodologies in defining SME loans, raising comparability issues, data for 2007-2009 were excluded. Two data sources are available in Indonesia for SME finance: bank data and non-bank data (finance companies, the Indonesian Export Financing Institution LPEI/Eximbank, and the state micro-credit company Permodalan Nasional Madani -PNM).

All these sources of finance are included in the first scoreboard table. In order to provide more precise information about the specificities of SME financing in Indonesia, a second scoreboard table has been included in the ‘Alternative sources of finance’ section, with data from the non-banking sector only.

Outstanding SME lending from banks has shown consistent growth throughout the 2010-2017 period, increasing by 172.3% in seven years, reaching IDR 1 059.2 trillion. Moreover, bad debts were kept at a healthy level, with Non-Performing Loans (NPLs) staying under 5% throughout 2010-2017. Outstanding business loans are expected to increase a lot for all companies in 2018, since lending as of the end of the first semester has already exceeded the annual amount of 2017.

Long-term loans have been the predominant type of loans for SMEs over the period. Particularly, banks consider Indonesian SMEs more and more reliable, as they were given larger amount of loans with longer terms over the 2010-17 period.

Lending interest rate for SMEs has declined faster than interest rate for large companies over the 2010-2017 period, even though they remain slightly higher. The interest rate spread declined from 2.16 percentage points in 2010 to 1.62 percentage points in 2017. The main reason behind these higher rates is the lack of collaterals pledged by SMEs for their loans.

From 2012 to 2017, financing channeled by the Venture Capital Company shows a significant increase, reaching IDR 7.1 trillion in 2017, a 63.45% increase compared to 2012. Meanwhile, leasing activities increased by 7.26% in 2017 compared to 2016 (+187.12% during the 2007-2017 period), while factoring activities also increased by 15.65% in 2017 compared to 2016 (+504.54% since 2007).

Since 2007, the Indonesian Government is developing a financing scheme programme called People Business Credit Programme or Kredit Usaha Rakyat (KUR). The goal of this program is to increase SMEs’ access to finance and work as a bridge for SMEs to obtain a financing scheme from a financial institution. This program has a good performance as outstanding loans from KUR has increase, amounting to IDR 22.8 trillion in 2015, IDR 94.4 trillion in 2016 and IDR 96.7 trillion in 2017. The total NPL ratio is also very low as it stands at 0.73% in 2016 and 0.26% in 2017.

Table 18.1. Scoreboard for Indonesia, 2007-18

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 (June)

Debt

Outstanding business loans, SMEs

IDR trillion

110.1

127.0

127.4

389.0

476.8

551.5

637.3

733.0

792.1

952.2

1 059.2

1 099.0

Outstanding business loans, total

IDR trillion

1 001.9

1 307.7

1 307.8

1 777.8

2 217.5

2 726.8

3 321.2

3 707.7

4 093.9

4 908.4

5 320.1

5 584.2

Share of SME outstanding loans

% of total outstanding business loans

10.99

9.71

10.20

21.86

21.46

20.19

19.15

19.74

19.32

19.38

19.90

19.68

Outstanding short-term loans, SMEs

IDR trillion

..

..

..

102.6

120.8

141.7

195.0

215.4

100.1

115.0

94.3

88.7

Outstanding long-term loans, SMEs

IDR trillion

..

..

..

286.1

354.9

408.7

440.9

516.5

623.8

729.0

901.0

944.4

Share of short-term SME lending

% of total SME lending

..

..

..

26.40

25.39

25.74

30.67

29.43

13.83

13.63

9.47

8.58

Government guaranteed loans, SMEs

IDR trillion

17.2*

17.2

29.0

34.2

40.9

40.3

22.8

94.4

96.7

64.6

Direct government loans, SMEs

IDR trillion

..

0.04

0.41

1.07

1.15

1.25

1.43

1.15

1.56

1.25

0.41

0.01

Non-performing loans, total

% of all business loans

4.08

3.20

3.35

2.55

2.16

1.87

1.77

2.16

2.49

2.96

2.63

2.77

Non-performing loans, SMEs

% of all SME loans

4.80

3.87

4.22

3.97

3.43

3.23

3.19

4.00

4.20

4.05

3.89

4.36

Interest rate, SMEs

%

16.30

16.79

16.60

14.89

14.53

13.99

14.14

14.54

13.99

13.59

13.06

12.91

Interest rate, large firms

%

12

13

13

12.73

12.28

11.60

11.88

12.48

12.51

12.16

11.39

11.41

Interest rate spread

% points

4.14

3.30

3.79

2.16

2.25

2.39

2.26

2.06

1.48

1.43

1.67

1.49

Non-bank finance

Venture and growth capital

IDR trillion

..

..

..

..

..

4.3

6.0

6.9

7.2

8.5

7.1

8.2

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

38.70

14.68

4.38

17.69

-16.26

14.65

Leasing and hire purchases

IDR trillion

36.5

50.7

46.5

53.7

76.6

105.1

117.4

111.0

105.4

97.7

104.8

112.3

Factoring and invoice discounting

IDR trillion

2.2

2.2

2.0

2.3

3.9

5.1

7.7

9.4

10.7

11.5

13.3

14.6

Note: This scoreboard consists in data from both bank and non-bank. Data from non-bank start in 2016 due to the availability of data. Another scoreboard that includes only non-bank data is to be found in the “Alternative sources of SME financing” part of the full profile. Data for venture and growth capital, leasing and hire purchases, factoring and invoice discounting are for all business, including large enterprises. *Data for 2007-2009.

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

19. Ireland

Irish SMEs contribute to just under 70% of employment, and account for 99.8 percent of all enterprises.

Debt levels of Irish businesses are declining steadily and have reduced 42% since 2010 from EUR 27.1 billion to EUR 15.8 billion in 2017.

Gross new lending to core SMEs was EUR 3.6 billion in 2017, representing a 3.3% annual increase.

Loan approval rates continue to be stable with 88% of applications either fully or partially approved.

The interest rate spread between large (2.13%) and small loans (4.28%) has decreased for the first time since 2007.

Venture capital raised by Irish SMEs continues to grow, and reached EUR 994 million in 2017, a 12% increase since 2016.

Bankruptcies increased 12% in 2017, but have cumulatively declined since their peak in 2011. 2017 figures show a 9% decline compared to 2015 figures.

Significant progress has been made towards resolving SME NPLs in recent years and NPL trends continue to move in a downward trajectory.

In order to mitigate the impact on credit conditions in Ireland due to uncertainties surrounding Brexit, the government has sought to introduce various mitigation measures for SMEs, including the Brexit Loan Scheme, and is exploring other mitigation measures.

Some of the main policies introduced to encourage access to credit for small and medium businesses include:

  • The Supporting SMEs Online Tool, a cross-government initiative, where small businesses receive a list of available government supports based on their responses to a short questionnaire.

  • The Strategic Banking Corporation, an initiative designed to increase the availability of funding to SMEs at a lower cost and on more flexible terms than has recently been available on the Irish Market.

  • The Credit Guarantee Scheme which encourages additional lending to small businesses by offering a partial government guarantee to banks against losses on qualifying loans to eligible SMEs.

  • The Microenterprise Loan Fund which provides support in the form of loans for up to EUR 25 000, available to start-up, newly established, or growing micro enterprises with viable business propositions employing less than 10 people.

  • The Credit Review Office which helps SME or Farm borrowers who have had an application for credit of up to EUR 3 million declined or reduced. The Credit Review Office also examines cases where borrowers feel that the terms and conditions of their existing loan, or new loan offer, are unfairly onerous or have been unreasonably changed to their detriment.

Table 19.1. Scoreboard for Ireland

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

..

..

..

27.10

27.34

25.70

24.52

21.40

19.31

16.11

15.82

Outstanding business loans, total

EUR billion

56.08

59.57

52.50

42.42

40.31

38.06

36.65

31.79

29.82

28.00

27.74

Share of SME outstanding loans

% of total outstanding business loans

..

..

..

63.89

67.82

67.51

66.89

67.32

64.78

57.54

57.04

New business lending, SMEs

EUR billion

..

..

..

2.28

2.21

1.99

1.91

2.40

2.65

3.24

3.68

Outstanding short-term loans, SMEs

EUR billion

17.26

15.02

10.93

6.05

3.81

3.06

3.02

2.39

1.79

2.03

2.52

Outstanding long-term loans, SMEs

EUR billion

2.12

1.93

1.34

0.93

0.58

0.54

0.60

0.78

1.09

1.00

0.73

Non-performing loans, total

% of all business loans

..

..

..

..

17.69

23.66

26.14

23.88

17.16

13.92

10.00

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

.. 

41.00

41.00

27.00

26.00

18.70

22.60

Interest rate, SMEs

%

6.23

6.67

3.98

3.88

4.68

4.34

4.3

4.78

4.77

4.65

4.28

Interest rate, large firms

%

5.95

6.19

3.22

2.86

3.33

2.81

2.76

2.98

2.43

2.18

2.13

Interest rate spread

% points

0.28

0.48

0.76

1.02

1.35

1.53

1.54

1.8

2.34

2.47

2.15

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

..

..

41

40

46

41

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

36

39

36

31

30

23

21

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

30

24

20

14

15

16

15

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

81

82

84

75

75

Non-bank finance

Venture and growth capital

EUR million

225.9

242.9

288.1

310.2

274.4

268.9

284.9

400.7

522.1

888.1

994

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

7.53

18.61

7.67

-11.54

-2.00

5.95

40.65

30.30

70.10

12.00

Other indicators

Bankruptcies, SMEs

Number

344

613

1245

1386

1410

1317

1119

1007

816

642

720

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

78.20

103.10

11.33

1.73

-6.60

-15.03

-10.01

-18.97

-21.32

12.15

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

20. Israel

Small and medium enterprises (SMEs) constitute the overwhelming majority of companies in Israel. As of 2016, there were 541 722 businesses in Israel and 99.5% of them were SMEs which employed up to 100 workers each.

SME and entrepreneurship policies in Israel are primarily designed by the Ministry of Economy and Industry and implemented by the Israel Innovation Authority (IIA) and the Small and Medium Business Agency (SMBA). While the IIA (formerly known as the Chief Science Office) has a longstanding presence in the Israeli policy framework and focuses on leading technology-based start-ups and SMEs, the SMBA has been established more recently to cater to all SMEs in Israel’s main economic sectors through business management training and coaching, subsidised access to finance (for example, through the the national loans guarantee programme) and a new network of business development centres (MAOF centres).

In March 2016, the credit data law was passed, whose intent is to establish a central database for household and SME credit by 2018. The law is expected to improve competition and data accessibility in the Israeli credit market. In January 2017, another law that separates credit card companies and banks was passed as part of a series of moves to enhance competition in the banking industry, and lower financing costs for SMEs.

For the first time in 20 years, a new company received a credit-clearing license, allowing it to enter and compete in the credit cards market the following year. This is expected to lower credit card clearing costs of small and medium-sized businesses.

In March 2017, the Israel Securities Authority completed the enactment of mass financing regulations for research and development companies and SMEs. In April 2017, the same agency published regulations that define regulation hierarchy and easements for small corporations that issue shares.

In March 2017, the Knesset (Israel’s legislature) passed the Ethics of Payments to Suppliers Law (known in the EU as Late Payments Directive). This law determines the maximum period within which payments can be made to suppliers for the sale of goods, provision of services or performance of work. The purpose of the law is to reduce the payment period for the business sector, thereby diminishing the need for working capital credit among SMEs, and to increase transparency in payments.

Table 20.1. Scoreboard for Israel

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

ILS billion

169.3

171.2

161.6

173.8

177.7

187.0

186.7

211.9

244.6

256.6

271.5

Outstanding business loans, total

ILS billion

413.9

460.9

425.2

438.9

458.6

450.4

445.7

447.9

415.6

422.8

443.0

Share of SME outstanding loans

% of total outstanding business loans

40.9

37.14

38.01

39.6

38.75

41.52

41.89

47.31

58.86

60.69

61.28

Government loan guarantees, SMEs

ILS million

27

17

121

164

116

116

215

232

257

184

143

Government guaranteed loans, SMEs

ILS million

170

109

757

1 028

890

1 057

1 951

2 112

2 340

1 838

1 587

Non-performing loans, total

% of all business loans

..

..

..

..

..

..

..

..

2.77

2.20

1.51

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

..

..

..

2.13

1.63

1.44

Interest rate, SMEs

%

..

..

..

..

..

..

..

..

3.96

3.83

4.01

Interest rate, large firms

%

..

..

..

..

..

..

..

..

2.95

2.97

3.10

Interest rate spread

% points

..

..

..

..

..

..

..

..

1.02

0.86

0.91

Non-bank finance

Venture and growth capital

USD billion

1.76

2.08

1.12

1.22

2.08

1.88

2.40

3.41

4.31

4.83

5.24

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

18.0

-46.1

8.8

70.3

-9.5

28.0

41.8

26.4

12.2

8.5

Other indicators

Payment delays, B2B

Number of days

..

..

..

..

..

..

..

..

..

57.2

53

Bankruptcies, SMEs

Number

..

..

2 061

2 834

3 737

5 000

5 610

5 322

5 175

7 900

..

Bankruptcies, SMEs (growth rate)

%, year-on-year growth rate

..

..

..

37.51

31.86

33.8

12.2

-5.13

-2.76

52.66

..

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

21. Italy

Small and medium-sized enterprises dominate the business landscape in Italy, employing approximately 80% of the industrial and service labour force, and generating over two-thirds of turnover and value added.

Slow economic recovery translated into a subpar recovery in lending markets: credit to firms expanded slightly in 2017 and at a more sustained pace in early 2018, but remained highly uneven. Lending increased for large enterprises, but continued to fall for smaller firms, resulting in a persistent gap in credit developments by firm size.

Supply conditions remained broadly accommodative, but collateral requirements held steady at a high level compared to the past. The cost of credit stood at historically very low levels: the average interest rate charged to SMEs decreased slightly to half the value recorded at the outbreak of the crisis, further narrowing the spread between small and larger enterprises.

Credit quality improved further as the economic recovery gained strength. The ratio of SME new non-performing loans to outstanding loans declined further, falling below pre-crisis levels. Bad loans, a legacy of the deep recession, started falling after years of continuous growth.

Equity financing for SMEs, provided in the form of early stage and expansion capital, slightly increased in 2017 compared to the previous year, while resources devoted to firms of all sizes nearly halved; as a result, the SME share nearly doubled to more than 60%.

Business-to-business payment delays reached a new 10-year low in 2017. The economic recovery fostered a further improvement in payment patterns, both in agreed timeframes and average delays in excess to these agreed spans. Bankruptcies dropped for the third year in a row, down by 11% on the previous year.

Several financial support measures, introduced or stepped up during the crisis, continued to help firms to cope with the still moderate economic growth.

Credit guarantee schemes continued to play a key role in easing access to finance: in 2017, the Central Guarantee Fund provided EUR 12.3 billion in guarantees for EUR 17.5 billion worth of loans. The post-crisis period led to increased government spending in the fund, up to a level that led to its overhaul. The reform to its operations, which is due to come into effect in early 2019, is based on a new evaluation system of firms’ creditworthiness, and aims to promoting a more efficient and targeted allocation of public resources.

Long-term individual savings plans (piani individuali di risparmio or PIR) were introduced by the 2017 Budget Law to widen firms’ financing opportunities, channelling private savings to investment in financial instruments issued by Italian companies. In 2017, 44 Italian mutual funds offered individual savings plans: their total assets amounted to EUR 12.4 billion, of which more than 56% was invested in corporate securities issued by domestic non-financial companies.

Initiatives have been undertaken over the last years to provide capital to potentially high growth firms by establishing public-private funds of funds. These measures flanked direct co-investment funds aimed at boosting the development of technological start-ups and innovative SMEs. More recently, late-stage funds have been launched in order to face the scale-up challenge, enabling SMEs to seize growth opportunities.

Table 21.1. Scoreboard for Italy, 2007-17

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

187

191

193

210

207

204

197

192

188

175

170

Outstanding business loans, total

EUR billion

998

1067

1057

1122

1134

1118

1061

1025

1015

984

958

Share of SME outstanding loans

% of total business loans

18.7

17.9

18.3

18.7

18.2

18.2

18.5

18.7

18.5

17.8

17.7

Short-term loans, SMEs

EUR billion

59

56

52

50

48

47

42

39

35

31

28

Long-term loans, SMEs

EUR billion

115

120

125

136

133

128

122

115

112

103

101

Total short and long-term loans, SMEs

EUR billion

174

177

177

186

181

175

164

155

148

134

130

Share of short-term loans, SMEs

% of total short and long-term SME loans

34.0

31.9

29.3

26.9

26.4

26.6

25.7

25.3

23.8

22.9

21.8

Direct government loans, SMEs

EUR million

337

373

255

276

272

252

390

597

392

418

431

Government guaranteed loans, SMEs (CGF)

EUR million, flows

2 300

2 353

4 914

9 119

8 378

8 190

10 811

12 935

15 065

16 703

17 462

Government loan guarantees, SMEs (CGF)

EUR million, flows

1 146

1 160

2 756

5 225

4 435

4 036

6 414

8 392

10 216

11570

12 260

Non-performing loans, SMEs

EUR million

12 760

13 875

16 470

23 952

26 047

28 924

32 365

37 150

40 136

41 389

39 935

Non-performing loans, SMEs

% of total SME loans

6.8

7.3

8.5

11.4

12.6

14.2

16.5

19.4

21.4

23.6

23.6

Interest rate, SMEs

%

6.3

6.3

3.6

3.7

5.0

5.6

5.4

4.4

3.8

3.2

3.1

Interest rate, large firms

%

5.7

4.9

2.2

2.2

3.3

3.8

3.4

2.6

2.1

1.8

1.8

Interest rate spread

%

0.6

1.4

1.4

1.5

1.7

1.8

2.0

1.8

1.7

1.4

1.3

Collateral, SMEs

%

54

54

52

53

55

54

55

55

56

57

57

Rejection rate

% of firms reporting that they had not obtained some or all of the credit requested

3.1

8.2

6.9

5.7

11.3

12.0

8.9

8.4

6.0

4.0

4.3

Utilisation rate

SME loans used / authorised

79.7

80.7

80.7

82.8

83.6

85.7

86.7

87.0

86.7

84.5

84.2

Non-bank finance

Venture capital investments (early stage), SMEs

EUR million

66

115

98

89

82

135

82

43

74

103

133

Growth capital investments (expansion), SMEs

EUR million

295

440

260

263

500

504

438

230

170

155

161

Growth capital investments (expansion), total

EUR million

641

796

371

583

674

926

914

1179

333

710

337

Other indicators

Payment delays, B2B (all firms)

Average number of days

..

23.6

24.6

20.0

18.6

20.2

19.9

18.5

17.3

15.4

14.2

Bankruptcies, total

Number

6 162

7 508

9 380

11 239

12 157

12 543

14 133

15 689

14 739

13 531

12 061

Bankruptcies, total

%, Year-on-year growth rate

21.8

24.9

19.8

8.2

3.2

12.7

11.0

-6.1

-8.2

-10.9

Incidence of insolvency, total

per 10 000 enterprises

11.2

13.7

17.0

20.3

21.6

22.0

25.0

27.9

26.4

24.1

21.5

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

22. Japan

Japanese SMEs accounted for 99.7% of all businesses and employed 34 million individuals, or approximately 70.1% of the private sector labour force in 2014.

Lending to SMEs decreased every year between 2007 and 2012, reaching a total decrease of 6.6% over that period. In 2013, outstanding SME loans rose by 1.5%, and have continued to increase since then, reaching JPY 271.5 trillion in 2016 and JPY 282.1 trillion in 2017 (+3.9%).

Average interest rates on new short-term loans in Japan were very low and continuously declined between 2007 and in 2017, more than halving from 1.64% to 0.61%. Long-term interest rates on new loans followed a broadly similar pattern, declining from 1.7% in 2007 to 0.8% in 2017, and were thus only slightly higher than short-term interest rates.

Japanese venture capital investments peaked in FY 2007 at JPY 193 billion, and decreased by 29.5% and 36% in FY 2008 and 2009 respectively. Since 2009, VC investments have been inconsistent. In 2017, VC investments totalled JPY 197 billion, a 29.6% increase from 2016.

Leasing volumes to SMEs plummeted in the aftermath of the financial crisis, dropping by almost 40% between 2007 and 2009. Between 2010 and 2013, leasing volumes recovered. In 2016, leasing volumes were JPY 2.56 trillion and they increased slightly to JPY 2.57 trillion in 2017, but still remain well below 2007 levels.

SME bankruptcies, which account for more than 99% of all bankruptcies in Japan, decreased by more than 40% between 2007 and 2017, reaching a 27-year low of 8 397 (-0.5% from 2016).

Total non-performing business loans have continuously declined since 2013, after having experienced erratic movement over the 2007-12 period. In 2016, total NPLs declined by 2.91% to JPY 11 787 billion in 2016 and by 2.52% to JPY 10 483 billion in 2017.

The Japanese Government offers financial support for SMEs, in the form of a credit guarantee programme and direct loans for SMEs. In March 2018, the total amount of outstanding SME loans was approximately JPY 267 trillion (provided by domestically licensed banks and credit associations). The outstanding amount of the credit guarantee programme was JPY 22.2 trillion (covering 1.3 million SMEs), and the outstanding amount of the direct loan programme was JPY 21.2 trillion, (covering 1 million of Japan’s 3.81 million SMEs).

Table 22.1. Scoreboard for Japan, 2007-17

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt 

Outstanding business loans, SMEs

JPY trillion

260.8

259.1

253.1

248.3

245.6

243.6

247.2

251.7

258.4

265.6

275.4

Outstanding business loans, total

JPY trillion

374.5

385.0

379.3

366.1

366.9

370.4

369.7

387.2

395.2

405.1

415.5

Share of SME outstanding loans

% of total outstanding business loans

69.64

67.31

66.72

67.82

66.94

65.76

66.87

65.00

65.38

65.57

66.29

Value of CGCs loan guarantees (Government loan guarantees, SMEs)

JPY trillion

29.4

33.9

35.9

35.1

34.4

32.1

29.8

27.7

25.8

23.9

22.2

Non-performing loans, total (amount)

JPY trillion

17.1

17.1

16.8

16.6

17.2

17.3

15.3

13.9

12.8

11.8

10.5

Non-performing loans, total

% of all business loans

4.56

4.45

4.42

4.54

4.68

4.66

4.14

3.60

3.23

2.91

2.52

Prime lending rate for short-term loans

%

1.88

1.68

1.48

1.48

1.48

1.48

1.48

1.48

1.48

1.48

1.48

Prime lending rate for long-term loans

%

2.30

2.40

1.65

1.60

1.40

1.20

1.20

1.10

1.10

0.95

1.00

New short-term interest rate (Not only for businesses)

%

1.64

1.53

1.23

1.10

1.04

1.02

0.91

0.88

0.80

0.67

0.61

New long-term interest rate (Not only for businesses)

%

1.73

1.67

1.46

1.29

1.21

1.16

1.10

1.00

0.94

0.80

0.80

Outstanding short-term interest rate (Not only for businesses)

%

1.67

1.49

1.26

1.19

1.10

1.03

0.88

0.85

0.78

0.62

0.58

Outstanding long-term interest rate (Not only for businesses)

%

2.05

1.99

1.76

1.65

1.54

1.42

1.30

1.19

1.10

0.97

0.90

Non-bank finance

Venture capital investments (all stages total)

JPY billion

193

136

87

113

124

102

181

117

130

152

197

Venture capital investments (all stages total)

%, year-on-year growth rate

..

-29.53

-36.03

29.89

9.73

-17.74

77.45

-35.36

11.11

16.92

29.60

Venture capital (seed and early stage)

% (share of all stages)

..

..

36.80

32.50

44.30

57.80

64.50

57.20

62.80

68.30

62.90

Venture capital (expansion and later stage)

% (share of all stages)

..

..

63.20

67.50

55.70

42.20

35.50

42.80

37.20

31.70

37.1

Leasing, SMEs

JPY billion

3 471

2 822

2 100

2 139

2 231

2 284

2 645

2 363

2 604

2 566

2 570

Other indicators

Bankruptcies, SMEs

Thousands

14.0

15.5

15.4

13.2

12.7

12.1

10.8

9.7

8.8

8.4

8.4

Bankruptcies, SMEs

%, year-on-year growth rate

..

10.76

-0.82

-13.96

-4.22

-4.81

-10.18

-10.37

-9.43

-4.17

-0.50

Bankruptcies, total

Thousands

14.1

15.6

15.5

13.3

12.7

12.1

10.9

9.7

8.8

8.4

8.4

Bankruptcies, total

%, year-on-year growth rate

..

11.04

-1.06

-13.95

-4.41

-4.79

-10.47

-10.35

-9.44

-4.15

-0.49

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

23. Kazakhstan

In 2017, SMEs accounted for 96.2% of all businesses in Kazakhstan, 36.6% of the total employed population and 25.6% of national GDP.

Outstanding SME loans decreased by 10.2% in 2017, after two years of growth. New lending to SMEs also decreased by 23.2% in 2017. Consequently, SME outstanding loans as a share of total business loans dropped slightly to 32.6%, while the share of new SME loans in total new lending dropped nearly 6 percentage points to 20.0%.

Interest rates for SMEs have fluctuated over the reference period, growing steadily from a record low of 11.5% in 2014 to 14.0% in 2016. In 2017, however, they receded to 13.7%, but 1.4 percentage points higher than the average interest rate charged to large enterprises.

Among non-bank sources of finance, leasing has the largest market and is steadily growing. In 2017, leasing and hire purchases were 2.9 times their 2009 level.

Total non-performing loans (loans with arrears of more than 90 days in banks’ portfolios increased to 9.3% in 2017, while SME’s NPL ratio reached 9.6%.These figures are under than the National Bank’s maximum NPL requirement of no more than 10% of the total value of loan portfolios.

The government plays an important role in maintaining SMEs’ access to lending. Primarily, it allocates funds to commercial banks for the provision of concessional lending to SMEs in times of liquidity shortages in the market. The largest placement of state funds for SME lending took place in 2009, when the interest rate for SMEs was restricted to 11.5%. In 2014-15, the government also restricted the interest rate charged to SMEs in the manufacturing industry to 6%. As a result of these measures, the market experienced an unusual situation in which there was a negative interest rate spread between SMEs and all businesses in 2009, 2015 and 2016. In 2017, however the interest rate spread between SMEs and the whole business sector became positive at 1.27%.

Since 2010, the government, through its “Damu” Entrepreneurship Development Fund, has subsidised interest rate expenses and provided loan guarantees for SMEs under the “Business Roadmap 2020” Programme. Loan guarantees are becoming increasingly popular in Kazakhstan, and have grown in number from just three in 2010 to 3 662 at the beginning of 2018.

Table 23.1. Scoreboard for Kazakhstan

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

KZT billion

1 508

1 571

1 708

1 389

1 341

1 412

1 283

1 788

2 060

3 105

2 789

Outstanding business loans, total

KZT billion

5 220

5 605

5 879

5 892

6 849

7 534

8 110

8 532

9 027

9 234

8 568

Share of SME outstanding loans

% of total outstanding business loans

28.89

28.02

29.06

23.58

19.58

18.74

15.83

20.95

22.83

33.62

32.55

New business lending, total

KZT billion

7 764

5 373

3 742

3 291

4 795

5 774

6 109

8 044

7 345

7 724

7 615

New business lending, SMEs

KZT billion

1 870

1 273

753.10

690 .15

794 .48

1 050

889 .71

1 198

1 279

1 984

1 524

Share of new SME lending

% of total new lending

24.08

23.70

20.13

20.97

16.57

18.18

14.56

14.90

17.41

25.68

20.02

Short-term loans, SMEs

KZT billion

296

298

236

206

219

277

199

392

390

826

411

Long-term loans, SMEs

KZT billion

1 211 2

1 273

1 472

1 183

1 122

1 135

1 084

1 395

1 670

2 279

2 377

Share of short-term SME lending

% of total SME lending

19.66

18.96

13.82

14.83

16.34

19.64

15.51

21.95

18.93

26.60

14.75

Government loan guarantees, SMEs

KZT million

..

..

..

339

2 060

3 854

3 336

7 284

11 021

11 952

17 016

Government guaranteed loans, SMEs

KZT million

..

..

..

677

4 238

10 991

7 090

15 423

26 964

26 903

42 783

Direct government loans, SMEs

KZT million

5 526

125 226

257 389

132 907

82 704

78 205

85 842

188 426

236 891

247 275

230 469

Non-performing loans, total

% of all business loans

..

..

..

..

..

29.80

31.15

23.55

7.95

6.72

9.31

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

22.33

22.40

11.74

12.69

8.79

9.58

Interest rate, SMEs

%

14.28

15.67

14.01

13.34

12.49

12.10

12.46

11.48

12.95

14.01

13.66

Interest rate, large firms

%

12.77

14.88

14.04

12.72

11.08

10.58

10.07

10.01

13.47

14.49

12.39

Interest rate spread

% points

1.51

0.79

-0.03

0.62

1.41

1.52

2.39

1.47

-0.52

-0.48

1.27

Non-bank finance

Leasing and hire purchases

KZT million

..

..

..

60 352

80 085

84 503

106 848

129 019

126 637

167 028

176 467

Factoring and invoicing

KZT million

..

..

..

..

..

7 889

15 125

33 160

37 655

..

..

Other indicators

Bankruptcies, total

Number

0

2

3

8

36

77

125

143

257

516

1978

Bankruptcies, total (growth rate)

%, year-on-year growth rate

..

..

50.00

166.67

350.00

113.89

62.34

14.40

79.72

100.78

283.33

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

24. Korea

Lending patterns for SMEs and large firms are diverging; in 2017, the outstanding stock of SME loans expanded by KRW 45 trillion, while the stock of large business loans declined by KRW 4 trillion.

The share of outstanding short-term loans in total loans has been in continuous decline between 2007 (75%) and 2017 (51.3%).

Government loan guarantees increased strongly between 2008 and 2009, but have increased at a slower pace afterwards. Between 2016 and 2017, the volume of guarantees rose by 4.8%. The amount of direct lending to SMEs in 2017 reached KRW 4.7 trillion which is about 0.7% of all outstanding business loans to SMEs.

1.11% of all SME loans were non-performing in 2017, down from 1.30% in 2016 and below its 2010 peak of 3.11%. In contrast, 1.76% of all business loans were non-performing in 2017, indicating that large business loans are substantially likelier to be non-performing than SME loans. This could be attributed to conservative and risk-averse lending behaviors of Korean banks towards SMEs.

Interest rates to SMEs remained low (by historical Korean standards) in 2017, at 3.62%.

Venture and growth capital investments more than doubled between 2007 and 2017, and expanded by just over 10% between 2016 and 2017.

Leasing and hire purchases volumes rose by 16% year-on-year in 2017.

The number of bankruptcies increased to 2 735 in 2008 after the global financial crisis. Since then, its number has decreased, and was 494 in 2017, a record low.

The government plans to implement two measures to financially support SMEs. First, a “graduation policy” for government financial support’ limits total support for life-time working capital by KRW 2.5 billion. Second, the “provision of financial support for early stage enterprises” plans to allot over 60% of total government financial support to early stage enterprises.

The “Innovation Venture Capital Fund” plans to raise KRW 10 trillion over the next 3 years beginning in 2018. The government will invest KRW 3.7 trillion in the fund, and the remaining KRW 6.3 trillion will be provided by private funds.

Table 24.1. Scoreboard for Korea

Indicators

Units

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Non-bank finance 

Outstanding business loans, SMEs

KRW trillion

369

422

443

441

455

462

489

522

561

610

655

Outstanding business loans, total

KRW trillion

425

511

531

541

586

618

654

706

756

776

817

Share of SME outstanding loans

% of total business loans

86.8

82.6

83.5

81.5

77.7

74.7

74.7

74.0

74.2

78.6

80.2

Outstanding Short-term loans, total; loans for operation

KRW trillion

319

375

373

372

388

395

405

419

426

414

419

Outstanding Long-term loans, total; loans for equipment

KRW trillion

106

136

158

169

197

223

249

287

330

362

398

Share of short-term loans; loans for operation

KRW trillion

75.0

73.4

70.3

68.7

66.3

63.9

61.9

59.3

56.3

53.4

51.3

Government loan guarantees, SMEs

KRW trillion

40

43

56

56

55

57

60

60

61

63

66

Government guaranteed loans, SMEs

% of SME business loans

10.8

10.0

12.7

12.7

12.2

12.3

12.2

11.5

10.9

10.3

10.0

Direct government loans, SMEs

KRW billion

2 480

2 635

4 812

3 098

2 957

3 149

3 715

3 270

3 902

4 551

4 666

Non-performing loans, total

% of all business loans

0.81

1.41

1.6

2.6

1.73

1.66

2.39

2.09

2.56

2.06

1.76

Non-performing loans, SMEs

% of all SME loans

0.99

1.93

1.8

3.11

2.17

1.96

2.11

1.94

1.64

1.3

1.11

Interest rate, SMEs

%

7.04

7.61

6.18

6.52

6.36

5.93

5.11

4.69

3.95

3.63

3.62

Interest rate, large firms

%

6.27

6.81

5.62

5.98

5.81

5.50

4.87

4.51

3.79

3.40

3.31

Interest rate spread

%

0.76

0.79

0.56

0.54

0.55

0.43

0.24

0.18

0.16

0.24

0.31

Rejection rate

%, 1-(SME loans authorised/ requested)

..

..

..

..

..

..

..

6.90

3.70

12.20

12.90

Non-bank finance 

Venture and growth capital

KRW billions

992

725

867

1 091

1 261

1 233

1 385

1 639

2 086

2 150

2 380

Venture and growth capital

(growth rate)

%

-26.9

19.7

25.8

15.6

-2.2

12.3

18.4

27.2

3.1

10.7

Leasing and hire purchases

KRW trillions

10.3

11.7

7.1

10.6

11.1

10.5

11.9

13.2

15.0

17.4

20.2

Other indicators

Payment delays, SMEs

Number of days past due date

11.0

12.1

9.9

12.1

11.7

9.1

9.7

10.0

9.2

13.3

8.9

Bankruptcies, total

Number

2 294

2 735

1 998

1 570

1 359

1 228

1 001

841

720

555

494

Bankruptcies, growth rate

Year-on-year growth rate, %

19.2

-26.9

-21.4

-13.4

-9.6

-18.5

-16.0

-14.4

-22.9

-11.0

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

25. Latvia

In Latvia, 99.87 % of economically active merchants and commercial companies (with some exceptions) are SMEs, and 94.25 % of these SMEs are micro-enterprises.

Equity and short-term liabilities other than bank loans (including trade payables) are the primary source of financing for SMEs. Nevertheless, the banking sector plays a key role in financing SMEs as well. In 2016, more than 20% of SME assets were financed by the banking sector, according to the Bank of Latvia SME Lending Survey.

Given the prevalence of SMEs in the Latvian economy, loans to SMEs dominate the banking sector’s lending activities, and comprised in 2017 76% of total outstanding loans to domestic non-financial corporations (NFCs). However, new lending (flow) to SMEs was smaller than in 2016, when significant amounts of large one-off lending took place.

Venture and growth capital increased in 2017 from EUR 79.4 million to EUR 120 million. In 2018, 3 new acceleration funds in addition to several seed, start-up and growth capital funds were introduced to the market to facilitate the development of venture capital investments.

The state promotes access to funding (through its micro-lending, start-up, and loans program) for firms lacking the financial credibility (collateral, net worth, cash flow and credit history) necessary to access funding from commercial banks or private investors.

Currently, state support programmes are introduced via the JSC Development Finance Institution Altum (ALTUM), a state-owned development finance institution offering aid and financial tools for various target groups. ALTUM develops and implements state aid programmes to compensate for market shortcomings that cannot be resolved by private financial institutions.

Table 25.1. Scoreboard for Latvia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR million

7 727

8 672

8 376

7 764

7 035

6 154

5 404

4 939

4 771

4 942

4 482

Outstanding business loans, total

EUR million

8 865

10 359

9 681

8 888

8 212

7 474

7 058

6 379

6 274

6 373

5 887

Share of SME outstanding loans

% of total outstanding business loans

87.16

83.71

86.52

87.34

85.67

82.34

76.57

77.43

76.05

77.55

76.1

New business lending, total

EUR million

..

..

..

..

1 708

1 914

1 965

1 268

1 346

1 795

1 347

New business lending, SMEs

EUR million

..

..

..

..

1 506

1 625

1 613

1 020

947

1 399

974

Share of new SME lending

% of total new lending

..

..

..

..

88.20

84.90

82.08

80.47

70.39

77.95

72.3

Outstanding short-term loans, SMEs

EUR million

2 653

3 203

3 262

3 009

2 682

2 349

1 852

1 570

1 672

1 371

1 287

Outstanding long-term loans, SMEs

EUR million

5 048

5 409

4 912

4 701

4 353

3 805

3 552

3 369

3 099

3 571

3 195

Share of short-term SME lending

% of total SME lending

34.4

37.2

39.9

39

38.1

38.2

34.3

31.8

35.1

27.7

28.7

Non-performing loans, total

% of all business loans

0.7

3.2

20.2

20.8

16.4

9.7

6.9

5.9

4.4

2.7

3.1

Non-performing loans, SMEs

% of all SME loans

0.8

3.7

22.4

23.4

18.8

11.7

8.4

7.2

5.7

3.3

3.8

Interest rate, SMEs

%

8.3

8.9

7.9

7.1

5.8

4.5

4.5

4.7

4.5

4.4

3.8

Interest rate, large firms

%

6.6

7.1

5.2

4.3

4

3.6

3.8

3.3

3.1

2.5

2.6

Interest rate spread

% points

1.7

1.8

2.7

2.8

1.8

0.9

0.7

1.4

1.4

1.9

1.3

Non-bank finance

Venture and growth capital

EUR million

..

..

..

..

..

..

..

37.95

51.98

79.37

120

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

..

..

36.97

52.69

51.13

Leasing and hire purchases

EUR million

1 576

1 594

1 145

841

810

867

875

864

932

939

1 034

Factoring and invoice discounting

EUR million

227.24

301.90

149.13

60.68

90.96

96.15

108.01

114.47

151.81

165.99

152.64

Other indicators

Bankruptcies, SMEs

Number

..

1 620

2 581

2 549

822

880

820

959

803

730

588

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

 ..

59.32

-1.24

-67.75

7.06

-6.82

16.95

-16.27

-9.09

-19.45

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

26. Lithuania

SMEs account for 99.6% of all enterprises operating in Lithuania, the majority of them (81.6%) being micro-enterprises. Most SMEs (80.9%) have chosen the legal form of private limited liability company and are primarily engaged in wholesale or retail trade activities (almost a third of all SMEs).

Equity capital and loans issued by non-banks (e.g. trade payables) are the main sources of funding for SMEs. As of 2016, equity capital financed half of SMEs’ assets, while slightly more than a third of assets were acquired through non-bank loans. Nevertheless, banks play an important role in financing SMEs. As of 2016, almost 13% of all SME assets were acquired via bank loans.

Although SMEs account for the vast majority of enterprises and create almost 70% of gross value added, their share of total business loans is considerably small. By the end of 2017, this share amounted to 40% of the total portfolio of loans to non-financial enterprises. Furthermore, even though outstanding SME loans have been growing (+ 18% over 2014-17), their share in the total portfolio of loans to non-financial enterprises has barely changed over the years.

SMEs rarely use alternative sources of financing in Lithuania. At the same time, the survey of non-financial enterprises conducted by the Bank of Lithuania in H2 2018 indicates that one fourth of micro-enterprises need alternative sources of financing. However, almost none of these enterprises are using such instruments. For example, while there are clear legal regulations for crowdfunding in Lithuania and a significant number of enterprises providing such services, crowdfunding was actively used by only 0.6% of the surveyed micro-enterprises.

The government supports SMEs by ensuring that they benefit from favourable conditions to obtain the necessary financing to start a business. Loans with preferential rates are given under the EU Entrepreneurship Promotion Fund over the 2014-20 period. SMEs may also get loans with preferential rates from the Venture Capital Fund II. Moreover, when a company does not have sufficient collateral, it may apply to the state-controlled enterprise UAB Investicijų ir verslo garantijos (Investment and business guarantees, INVEGA), which provides a guarantee of loan repayment. In addition, municipalities provide significant support to SMEs: when starting business, small enterprises may expect their set-up costs, part of interest payments and other expenses to be compensated.

Table 26.1. Scoreboard for Lithuania

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR million

..

..

..

..

..

..

..

3 143

3 231

3 404

3 723

Outstanding business loans, total

EUR million

8 409

9 864

7 978

6 816

6 906

7 047

6 828

7 404

7 740

8 611

9 252

Share of SME outstanding loans

% of total outstanding business loans

..

..

..

..

..

..

..

42.45

41.74

39.53

40.24

New business lending, total

EUR million

7 759

9 452

7 252

4 868

3 792

3 220

3 236

3 128

4 275

4 248

4 639

Non-performing loans, total (NFCs)

% of all business loans

..

..

..

..

..

..

..

10.31

8.39

6.25

5.04

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

..

..

17.54

14.11

11.18

8.59

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

19.1

15.6

19.0

10.2

22.8

8.6

10.5

15.6

Interest rate spread

% points

..

..

1.46

1.53

1.79

1.51

1.51

1.59

1.60

1.68

1.53

Non-bank finance

Leasing and hire purchases

EUR million

..

..

..

..

..

..

..

..

1 471

1 870

2 272

Factoring and invoice discounting

EUR million

..

..

..

151

200

231

348

359

407

434

517

Other indicators

Payment delays, B2B

Number of days

..

..

..

..

..

..

..

..

..

26

27

Bankruptcies, SMEs

Number

606

954

1 842

1 637

1 272

1 401

1 552

1 685

1 983

2 732

2 970

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

57.43

93.08

-11.13

-22.30

10.14

10,78

8.57

17.69

37.77

8.71

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

27. Luxembourg

SMEs account for 99.5% of all non-financial firms in Luxembourg. SMEs employed approximately 67.3% of the labour force and generated 65.2% of economy’s total value added.

New business lending to all firms decreased in 2017 compared to 2016 and remains below the peak of 2008. New loans to SMEs (defined as loans below EUR 1 million) increased in 2017 compared to 2016. The share of new loans to SMEs increases at 12.8% in 2017, the highest in the last five years but, below the peak of 16.1% in 2011.

In 2016, the interest rate for SMEs amounted to 1.8%, down from 5.7% in 2008. The interest rates for SMEs remained systematically higher than the interest rate for large corporations in 2007-16, with a gap of 55 basis points in 2017. In relative terms, SMEs are paying 45% more in interest than large corporations.

Alternative forms of financing such as venture capital and factoring may hold high potential for SMEs seeking finance. In 2017, nearly EUR 60 million of venture capital was invested in Luxembourgish firms.

Bankruptcies in Luxembourg stood at 904 in 2017, much lower than the peak of 1 050 in 2012, but higher than the 574 in 2008.

A simplified form of société à responsabilité limitée ("S.à r.l.-S") entered into force in January 2017. The simplified S.à r.l.-, also dubbed “1-1-1 companies” (one person, one euro, in one day), can be created more quickly and with fewer start-up funds compared with a regular S.à r.l.-. The S.à r.l.-S is restricted to physical persons, and is intended to facilitate the development of new business activities. Over the period January- July 2017, 370 firms have been registered as S.à r.l.-S compared with a total of 6 083 registrations.

Table 27.1. Scoreboard for Luxembourg

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

New business lending, total

EUR million

113 817

181 792

166 287

111 898

111 568

105 854

100 444

92 349

83 076

87809

80 264

New business lending, SMEs

EUR million

12 800

14 555

14 754

15 441

17 979

15 593

13 713

10 765

10 142

9 395

9 698

Share of new SME lending

% of total new lending

11.25

8.01

8.87

13.80

16.11

14.73

13.65

11.66

12.21

10.70

12.08

Non-performing loans, total

% of all business loans

0.12

0.18

0.44

0.48

0.64

0.59

0.52

0.41

0.40

0.27

0.38

Interest rate, SMEs

%

5.51

5.72

2.81

2.71

2.68

2.22

2.05

2.08

1.88

1.75

1.76

Interest rate, large firms

%

4.96

4.97

2.59

2.30

2.62

1.86

1.64

1.47

1.42

1.20

1.21

Interest rate spread

% points

0.54

0.75

0.21

0.41

0.06

0.35

0.41

0.62

0.46

0.55

0.55

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

18.20

..

25.80

16.40

23.00

26.15

18.93

Non-bank finance

Venture and growth capital

EUR thousand

103 343

298 650

49 021

132 917

281 484

86 212

38 601

127 758

144 368

193 590

58 371

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

188.99

-83.59

171.14

111.77

-69.37

-55.23

230.97

13.00

34.10

-69.85

Factoring and invoice discounting

EUR million

..

..

349

321

180

299

407

339

..

..

..

Other indicators

Bankruptcies, SMEs

Number

659

574

693

918

978

1 050

1 049

850

873

961

904

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

-12.90

20.73

32.47

6.54

7.36

-0.10

-18.97

2.71

10.08

-5.93

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

28. Malaysia

SMEs represent the vast majority of firms in the Malaysian economy, outnumbering large enterprises, both in terms of number and employment. According to the released Economic Census 2016, SMEs accounted for 98.5% of total business establishments in Malaysia in 2015.

Finance is becoming increasingly important for Malaysian companies, as reflected by the 9.3% growth in outstanding SME loans in 2016 (MYR 299.8 billion, from MYR 274.4 billion in 2015). Outstanding SME loans continued to grow in 2017, albeit at a slightly slower pace, increasing by 5.3% to MYR 315.7 billion. As total outstanding loans did not grow as rapidly, the share of SME lending in total business lending increased to 50.6% in 2017, from 48.7% in 2016 and 46.7% in 2015.

The annual average interest rate on SME loans by banking institutions (BIs) decreased from 7.8% in 2015 to 6.6% in 2016, but again increased slightly to 7.0% in 2017.

As of the end of December 2017, there were a total of 110 registered corporations within the Venture Capital and Private Equity sector (101 venture capital corporations (VCC) or venture capital management corporations (VCMC) and 9 private equity managing corporations (PEMC) or private equity corporations (PEC)). A total of MYR 7.0 billion are under management within these funds, which represents an increase of 7.7% year-on-year. Investments made in 2017 decreased significantly by 26.6%, to MYR 417.8 million, from MYR 569.5 million in 2016.

In 2017, the Credit Guarantee Corporation Malaysia Berhad (CGC) recorded a lower approval value of MYS 3.4 billion, as compared to MYS 4.2 billion in 2016, mainly due to the increased penetration to the microenterprise market segment, with lower average financing size. This is evidenced by the double-digit growth of 14.0% in the number of SME accounts approved, from 7 568 in 2016 to 8 637 in 2017.

Impaired financing, a proxy for non-performing loans, of the overall financial sector stood at 3.3% of total business loans, stable from 2016 and 2015 (3.3% and 3.2% respectively). Despite the rapid expansion of bank credit to SMEs, SME impaired financing substantively decreased from a peak of 7.5% in 2010, to 3.2% in 2017, and was thus almost on par with the share of large firms.

Since its inception in 2004, the National SME Development Council (NSDC) has continued to steer SME development in Malaysia by setting the strategic direction, and by formulating policies to promote the growth of SMEs across all sectors. The success of the NSDC can be measured through a number of outcomes, such as the adoption of a national definition for SMEs, the development of an SME database and statistics, the monitoring and analyse of SME performances to facilitate policy formulation, the streamlining dissemination of information on SMEs, the development of SME financial infrastructures and the endorsement of the formulation of an SME Masterplan.

More recently, the policy focus of the authorities has been to further expand the non-bank possibilities for risk capital, particularly to enhance access to finance for SMEs that are innovative, high-growth and active in new growth areas. The advent of Financial Technologies (FinTech) is transforming the financial landscape and these are expected to offer more financing alternatives to SMEs, including equity crowdfunding, investment account platforms (IAP) and peer-to-peer (P2P) lending.

Table 28.1. Scoreboard for Malaysia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

MYR billion

128.0

138.9

141.6

141.2

165.3

187.6

211.0

243.7

274.4

299.8

315.7

Outstanding business loans, total

MYR billion

290.7

328.3

343.1

375.3

422.0

465.1

499.8

545.9

588.1

616.0

623.8

Share of SME outstanding loans

% of total outstanding business loans

44.00

42.30

41.30

37.60

39.17

40.34

42.22

44.64

46.66

48.66

50.60

New business lending, total

MYR billion

163.1

129.0

104.9

141.1

171.4

169.5

178.8

196.4

179.3

178.7

200.0

New business lending, SMEs

MYR billion

63.2

58.9

50.9

62.2

75.2

84.7

78.3

77.7

72.0

74.6

70.7

Share of new SME lending

% of total new lending

38.77

45.70

48.50

44.06

43.90

49.94

43.78

39.57

40.12

41.77

35.33

Share of short-term SME loans outstanding

% of total SME lending

..

..

..

..

..

..

28.73

26.52

24.18

23.61

24.10

Share of long-term SME loans outstanding

% of total SME loans

..

..

..

..

..

..

71.27

73.48

75.82

76.39

75.90

Guarantee and Financing Schemes

No. of accounts (in thousands)

13.00

10.37

14.07

7.67

7.50

2.15

2.37

6.84

8.23

7.57

8.64

Guarantee and Financing Schemes

MYR million

4 567

3 014

3 112

2 495

2 861

1 066

1 546

3 175

3 356

4 224

3 380

Impaired financing, total (amount)

MYR billion

.. 

20.2

18.1

23.6

21.3

18.4

17.7

17.9

18.9

20.5

20.8

Impaired financing, total

% of all business loans

..

6.16

5.29

6.28

5.05

3.97

3.55

3.27

3.21

3.32

3.33

Impaired financing, SMEs (amount)

MYR billion

..

9.9

8.9

10.6

9.6

8.5

8.2

8.6

8.9

8.9

10.1

Impaired financing, SMEs

% of all SME loans

..

7.12

6.28

7.50

5.78

4.53

3.89

3.51

3.24

2.96

3.19

Interest rate, SMEs

%

..

6.39

5.50

5.69

5.74

5.72

6.06

7.18

7.81

6.60

7.00

Interest rate, large firms

%

..

6.08

5.08

5.00

4.92

4.79

3.79

5.41

5.11

5.06

4.82

Interest rate spread

% points

..

0.31

0.42

0.69

0.82

0.94

2.28

1.77

2.69

1.54

2.17

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

..

49.11

51.85

46.08

41.56

43.58

Non-bank finance

Total investment as at end of the period

MYR billion

1.78

1.93

2.59

3.39

3.59

2.76

3.43

3.25

2.22

2.92

2.45

Total investment as at end of the period

%, Year-on-year growth rate

53.90

8.13

34.06

31.05

5.81

23.12

24.52

5.45

31.58

31.61

16.05

Leasing and Factoring

MYR million

..

..

..

..

721

918

1 099

1 170

1 086

834

1 280

Note: Malaysia uses the term "Impaired financing" instead of “non-performing loans” and “Total investment as at end of the period” instead of “Venture and growth capital”.

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

29. Mexico

There are 4 million SMES in Mexico, 97.4% of which are microenterprises that account for 12.4% of Total Gross Production (TGP) and employ 47.2% of the workforce.

Outstanding loan volumes (stock) to SMEs have increased in recent years, at an average annual growth rate of 11.7% between 2009 and 2017.

In 2017, average interest rates varied depending on loan amounts and the size of the borrowing company. For large companies, the average interest rate was approximately 10.62%; for SMEs, the average was 16.99%

In recent years, the Mexican Government has developed a series of initiatives to support entrepreneurs and strengthen SMEs’ access to finance .These initiatives have included programmes to promote youth and women entrepreneurship and programmes to strengthen alternative financial instruments, particularly the use of venture capital by SMEs.

Guarantee funds have also been used to develop more targeted programmes. For example, government initiatives were developed to support the provision of credit to previously ignored companies, such as construction firms, travel agencies, real estate development SMEs, rural tourism SMEs, small taxpayers and SME government suppliers.

Finally, the increased competition between financial intermediaries has generated a significant improvement in credit conditions, which has resulted in longer loan maturities and lower interest rates.

Table 29.1. Scoreboard for Mexico

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

MXN billion

..

..

199.0

220.9

256.8

310.9

423.6

481.7

548.1

738.1

821.3

Outstanding business loans, total

MXN billion

..

..

975.1

1 054.3

1 218.7

1 299.5

1 424.7

1 518.7

1 758.3

2 059.6

2 357.5

Share of SME outstanding loans

% of total outstanding business loans

..

..

20.41

20.95

21.07

23.93

29.73

31.72

31.17

35.84

34.84

New business lending, total

MXN billion

..

..

..

79.3

164.4

80.8

125.3

93.9

239.6

301.3

297.9

New business lending, SMEs

MXN billion

..

..

..

21.9

35.9

54.1

112.6

58.2

66.4

190.0

83.2

Share of new SME lending

% of total new lending

..

..

..

27.65

21.83

67.02

89.91

61.92

27.70

63.07

27.92

Outstanding short-term loans, SMEs

MXN billion

11.1

41.3

39.1

30.8

30.0

36.9

34.3

12.5

17.7

21.7

32.1

Outstanding long-term loans, SMEs

MXN billion

10.8

22.4

38.5

36.6

44.2

60.1

80.9

89.0

90.1

107.1

99.1

Share of short-term SME lending

% of total SME lending

50.63

64.80

50.37

45.69

40.44

38.03

29.77

12.32

16.40

16.84

24.46

Government loan guarantees, SMEs

MXN billion

0.8

1.1

1.9

2.3

3.0

3.0

3.7

4.3

3.2

2.7

1.9

Government guaranteed loans, SMEs

MXN billion

21.9

63.8

77.7

67.4

74.3

96.9

115.1

101.6

107.8

128.8

84.3

Direct government loans, SMEs

MXN billion

..

..

29.5

30.8

53.3

63.0

88.1

135.4

183.8

111.1

131.2

Non-performing loans, total

% of all business loans

..

..

1.92

1.93

2.17

2.09

3.61

3.19

3.13

2.32

2.15

Interest rate, SMEs

%

19.88

16.22

12.05

11.85

11.44

11.19

9.91

9.21

9.14

11.04

16.99

Interest rate, large firms

%

7.44

7.97

8.11

7.90

7.67

7.58

6.55

6.00

6.04

8.12

10.62

Interest rate spread

% points

12.44

8.25

3.94

3.95

3.77

3.61

3.36

3.21

3.10

2.92

6.37

Non-bank finance

Venture and growth capital

USD billion

4.1

1.7

1.7

3.3

2.9

3.6

1.9

5.5

10.6

3.8

5.7

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

-57.24

-2.13

92.10

-11.90

25.35

-48.00

194.50

91.67

-64.13

49.66

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

30. New Zealand

SMEs dominate the business landscape in New Zealand, constituting 99.0% of all firms in the country.

Bank lending to businesses in 2017 continued its upward swing since the 2008-09 global financial crisis (GFC), rising by another 6% to an all-time high level of NZD 107.7 billion. SME lending increased for the fifth year in a row, and reached NZD 64.6 billion in 2017 (a 7% or NZD 4.2 billion increase since 2016). The share of SME business lending was 59.4% in 2016, and increased to 60% in 2017. Lending conditions across other sectors (i.e. household, commercial property, agriculture) remained tight compared to those of the past three years (RBNZ Credit Conditions Survey).

The proportion of non-performing loans for SMEs has also decreased slightly from 1.1% in 2016 to 0.9% in 2017. However, it still remains above the proportion of non-performing loans for all businesses, which remained the same in 2017 as is in 2016 at 0.5%.

In 2017, the base interest rate for SME loans remained at 9.3%, one of the lowest since the GFC. Despite the low interest rates on SME loans, the interest rate spread in 2016 stood at 4.6 percentage points, indicating that SME borrowing has become relatively more expensive since the crisis (it was 3% in 2008), compared to borrowing for large firms.

Despite a relatively positive lending environment for SMEs, rejection rates for SME loans have more than doubled since 2016, from 4.8% to 11.7% in 2017. This could be partially due to tighter lending standards (compared to a year ago) which have made it more difficult for some SMEs to obtain credit. The volume of SME loans has increased, which could also mean that banks have become pickier with loan applications. The tight lending standards could have played a role in the decreasing proportion of credit availability on acceptable terms for SMEs.

Alternative sources of finance for SMEs have been on an upward trajectory since 2012. In 2017, venture capital (VC) and growth investment increased to NZD 124.2 million (a 29.1% increase since 2016). Software, technology hardware and equipment, and related services sectors remained the main beneficiaries of these investments.

Equity crowdfunding is another way SMEs can raise funds. In 2016, a new regulatory framework for equity crowdfunding activities was introduced. Equity crowdfunding in New Zealand had its most successful year in 2017, raising NZD 13.4 million, up 24% since 2016.

Exporting SMEs receive additional support from the New Zealand government. In 2016, the government made changes to the mandate and some operational criteria to enable the New Zealand Export Credit Office (NZECO) to support a wider range of SME firms and larger exporters, while helping NZECO develop a more diversified risk portfolio.

Other indicators of SME financial performance equally showed improvement. The total number of bankruptcies has decreased significantly since 2016, reaching 1863 bankruptcies (down 6.7% or 133) in 2017. On average, it takes SMEs 6 days, past the due date, to pay off their invoices in 2017. This figure remained the same compared to last year and fell significantly since 2011 (from 15 to 6 days). The New Zealand Business Number (NZBN) and Electronic Invoicing (e-Invoicing) are the current government initiatives that aim to improve compliance, reduce payment delays and support a digital and connected New Zealand economy.

Table 30.1. Scoreboard for New Zealand

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

NZD billion

..

..

31.6

32.4

32.1

30.9

32.4

34.2

36.5

60.4

64.6

Outstanding business loans, total

NZD billion

80.0

87.6

80.4

78.9

79.9

83.0

85.4

89.0

95.0

101.6

107.7

Share of SME outstanding loans

% of total outstanding business loans

..

..

39.3

41.1

40.2

37.2

37.9

38.4

38.4

59.4

60.0

Non-performing loans, total

% of all business loans

..

..

1.7

2.1

1.8

1.5

1.1

0.8

0.6

0.5

0.5

Non-performing loans, SMEs

% of all SME loans

..

..

2.7

2.9

2.8

2.7

2.4

1.6

0.7

1.1

0.9

Interest rate, SMEs

%

12.2

11.2

9.8

10.1

10.0

9.6

9.5

10.3

9.4

9.2

9.3

Interest rate, large firms

%

9.0

8.2

5.7

6.3

6.1

6.0

5.4

6.0

5.4

4.6

Interest rate spread

% points

3.2

3.0

4.1

3.8

4.0

3.5

4.2

4.3

4.0

4.6

Rejection rate

1-(SME loans authorised/ requested)

6.9

11.6

18.4

20.9

11.4

14.6

9.4

8.4

10.6

4.8

11.7

Non-bank finance

Venture and growth capital

NZD million

..

..

..

..

..

41.2

67.9

62.2

83.7

96.2

124.2

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

..

..

..

..

..

64.8

-8.4

34.6

14.9

29.1

Other indicators

Payment delays, B2B

number of days

..

..

..

..

15.7

13.5

12.7

10.4

7.1

5.9

5.8

Bankruptcies, total

number

3 585

2 504

2 564

3 054

2 714

2 417

2 188

1 921

1 979

1 996

1 863

Bankruptcies, total (growth rate)

%, year-on-year growth rate

 

-30.2

2.4

19.1

-11.1

-10.9

-9.5

-12.2

3.0

0.9

-6.7

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

31. Norway

97% of all firms in Norway employ less than 50 people. The SME definition in Norway differs from the definition in use in most EU countries.

After two years of decline, the outstanding stock of SME loans rose in 2014 by almost 10% year-on-year and by almost 16% in 2015. Preliminary figures show a decline of more than 6% in 2016, however. The SME share of overall business lending in 2016 has decreased to 2014 levels at around 36%.

Short term lending to SMEs as a share of overall lending to SMEs increased in recent years, but the vast majority of SME lending is long-term, possibly due to the strength of legal rights and the depth of credit information in Norway.

Credit standards have tightened between the first quarter of 2015 and the second quarter of 2016, after several years of easing. Demand for credit has weakened considerably since the second half of 2015.

Venture and growth capital investments have been growing since 2012. However, the respective growth rates of 0.73% and the 6% in 2015 and in 2016 are nowhere near the strong, double-digit growth observed in 2013 and 2014.

After an uptick in the number of bankruptcies in 2013 and 2014 by 16.3% and 3.0% year-on–year respectively, bankruptcies went down by 1.9% in 2015 and continued to decrease in 2016 as well, by 0.72%.

In 2015, the Norwegian government introduced a new action plan for entrepreneurship. The plan outlines the Government's policies to improve conditions for starting and developing new businesses in Norway, with an emphasis on capital, competence and culture. The action plan has a wide-reaching set of actions, including increased entrepreneurship grants; it strengthened the financing of commercialisation of publicly financed research, established new seed capital funds, and introduced a pre-seed capital fund that will invest in young companies in collaboration with private investors.

Table 31.1. Scoreboard for Norway

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Debt

Outstanding business loans, SMEs

NOK million

358 963

451 130

416 407

433 844

454 031

452 815

433 061

474 908

550 037

515 151

Outstanding business loans, total

NOK billion

837

1 033

1 031

1 058

1 125

1 131

1 195

1 289

1 409

1 407

Share of SME outstanding loans

% of total outstanding business loans

42.88

43.65

40.40

41.03

40.35

40.04

36.23

36.84

39.04

36.62

Outstanding short-term loans, SMEs

NOK million

69 147

83 925

69 906

72 953

75 895

85 430

81 126

90 487

100 233

93 039

Outstanding long-term loans, SMEs

NOK million

289 816

367 205

346 501

360 081

378 136

367 385

351 935

384 421

449 804

423 111

Non-bank finance

Venture and growth capital

NOK million

39 888

29 597

14 577

30 305

39 262

37 699

63 228

74 553

75 094

79 622

Venture and growth capital

%, Year-on-year growth rate

..

-25.80

-50.75

107.90

29.56

-3.98

67.72

17.91

0.73

6.03

Other indicators

Bankruptcies, SMEs

Number

952

1 427

2 059

1 804

1 725

1 525

1 774

1 829

1 794

1 781

Bankruptcies, SMEs

%, Year-on-year growth rate

..

49.89

44.29

-12.38

-4.38

-11.59

16.33

3.10

-1.91

-0.72

Note: 2016 figures for Outstanding business loans, Outstanding short-term loans, Outstanding long-term loans and for Venture and growth capital are preliminary.

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

32. People’s Republic of China

In China, SMEs account for the majority of enterprises. More than 98.64% of all firms are small business with 300 or fewer employees. In 2017, new business creation reached record highs with an average 16 600 new companies being created daily, up 9.9% compared to 2016.

The stock of SME loans increased to CNY 40 517.3 billion in 2016,up 14.8% from 2015. The SME loan share, however, slightly decreased to 64.7% over 2014-16 because loan growth for larger companies increased as well during this time. The ratio of short-term loans to total loans for SMEs dropped to 40.97% in 2017, down 13.74 percentage points. The ratio of SME loans backed by collateral dropped to 52.05%, down by 3.62 percentage points.

In 2017, though the benchmark lending interest rate remained unchanged, the actual interest rate of bank loans for SMEs and large companies increased to 5.78% and 5.4% respectively, up by 1.01 and 0.51 percentage points, respectively, from the previous year. The interest rate spread between SMEs and large companies expanded from -0.12 percentage points in 2016 to 0.38 percentage points in 2017. In addition, SMEs were on average charged extra loan fees amounting to about 1.31% of the total bank loan volume. In 2017, the 1-year interest rate in the shadow banking sector ranged from 13%-17%, with a spread of about 9% from formal bank loans.

In 2017, 73.9% of SMEs applied for bank loans. The rejection rate of loan applications for SMEs was 4.1%, down 2.06 percentage points compared to 2016. On average, only 53.1% of funding amounts requested were finally granted. The utilisation rate of SME bank loans was 89.9%, while the utilisation rate of large companies was 95.7%.

In 2017, the total financing amount of Chinese securities markets was about CNY 3 175.9 billion, down 28.8% from 2016. In 2017, SMEs obtained CNY 343.6 billion from the Shenzhen SME Board, and CNY 149.6 billion from the Shenzhen Venture Board, and CNY 133.06 billion from NEEQ. Venture capital, leasing and factoring, online lending and crowdfunding continue to remain important sources of SME financing.

In 2017, payment delays for the B2B (business to business) and B2C (business to customer) sectors significantly decreased to 44 days and 11.5 days, respectively. The ratio of SME non-performing loans to total SME loans was 2.6%, 0.53 percentage points higher than the ratio of non-performing loans for all businesses. The bankruptcy rate for SMEs was 3.7% in 2017 according to survey data, down 21.78% from the previous year.

The National SME Development Fund, which focuses on VC/PE investments and growth for SMEs and entrepreneurs in the seed and early stages of development established four regional subsidiary funds with total assets of CNY 19.5 billion and completed 130 investment projects totalling CNY 3.84 billion in 2017. Another National Guide Fund for Venture Investment in Emerging Industries with funds totalling CNY 40 billion was also established in 2017. This fund focuses on investments in innovative, high-tech, seed and early-stage companies. In 2017, Special Funds for SME Development also changed its funding policy and initiated a national programme focusing on innovative cities for SMEs. Finally, the Chinese government also initiated a national financing guarantee fund of CNY 60 billion in 2018.

During 2009-17, broader policy adjustments and reforms were carried out, targeted at easing SME access to diversified financing sources. The Chinese government made many efforts to improve business environments by loosening regulation, offering quality and efficient public services, strengthening official supervision for illegal market behaviours and relieving the tax burden on SMEs.

Table 32.1. Scoreboard for the People’s Republic of China

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt 

Outstanding business loans, SMEs

RMB billion

..

..

13 616

17 139

21 168

25 356

28 585

33 302

35 300

40 517

..

Outstanding business loans, total

RMB billion

..

..

24 940

30 292

35 017

39 283

44 019

52 162

53 895

62 578

..

Share of SME outstanding loans

% of total outstanding business loans

..

..

54.60

56.58

60.45

64.55

64.94

63.84

65.50

64.75

..

Share of short-term SME lending

% of total SME lending

..

..

..

..

..

..

56.10

49.24

47.56

54.69

40.97

Direct government loans, SMEs

RMB billion

..

..

..

..

1 550

1 813

2 082

2 470

2 820

..

..

Non-performing loans, total

% of all business loans

..

..

..

..

1.26

1.21

1.25

1.49

2.04

2.07

..

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

1.75

1.65

1.66

1.97

2.59

2.60

..

Interest rate, SMEs

%

..

..

..

..

..

..

8.39

7.51

5.23

4.77

5.78

Interest rate, large firms

%

..

..

..

..

..

..

7.72

7.47

5.26

4.89

5.40

Interest rate spread

% points

..

...

..

..

..

..

0.67

0.04

-0.03

-0.12

0.38

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

51.59

52.98

54.52

54.76

55.67

52.05

..

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

..

..

..

..

69.88

63.06

53.09

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

..

..

6.19

11.97

11.72

6.13

4.07

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

93.51

94.75

94.48

94.03

89.91

Non-bank finance

Venture and growth capital (stock)

RMB billion

111

146

161

241

320

331

264

293

336

377

..

Venture and growth capital (stock, growth rate)

%, Year-on-year growth rate

..

30.80

10.26

49.93

32.88

3.59

-20.34

11.15

14.59

12.02

..

Venture and growth capital (incremental)

RMB billion

..

..

..

..

..

25.11

27.90

37.44

46.56

50.55

..

Venture and growth capital (incremental, growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

-11.10

34.20

24.36

8.60

..

Leasing and hire purchases

RMB billion

24

155

370

700

930

1 550

2 100

3 200

4 440

5 330

6 060

Factoring and invoice discounting

EUR billion

55.0

67.3

154.6

274.9

343.8

378.1

406.1

352.9

301.6

405.5

Other indicators

Payment delays, B2B

Number of days

..

..

..

..

..

..

95.91

72.31

64.44

65.21

44.00

Bankruptcies, SMEs

Percentage of all SMEs

..

..

..

..

..

..

8

7

5

5

4

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

..

-4.36

-24.59

-13.37

-21.78

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

33. Peru

Peru’s Central Reserve Bank (CRB) forecasts an annual growth of 4.0% in 2018 due to a better performance of exports and a positive performance of the terms of trade, which grew by 7.5% during the first semester of 2018. It is also expected that this ratio will experience a decline ranging from 1.0% to 4.9% by the end of 2018, due to trade tensions between U.S. and China. Besides, the Central Reserve Bank does not expect to lower its interest rate to stimulate the economy, since the inflation rate reached the lower bound of the upper limit of CRB’s inflation target (2% +/- 1%).

Outstanding business loans grew by 3.2% in 20174. Based on preliminary data, SME outstanding business loans amounted to 28.3% of all outstanding business in 2017, which is slightly higher than the share observed in 2016 (22.2%).

It is also important to point out that 2.75% of all outstanding business loans were non-performing loans, a slight increase from 2016. Non-performing loans for SME sector experienced an insignificant improvement of 20 basis point in 20175. On the other hand, the interest rate spread between SME loans and large firm loans fell slightly from 15.2 to 14.6 percentage points (pp), according to the Central Reserve Bank.

By 2017, 99.6% of Peruvian enterprises were SMEs (including micro enterprises, which employ less than ten persons), and they employed 88.7% of the private sector’s workforce. Compared to 2016, the SME sector grew by 10.0%, a significant recovery compared to recent years, according to the National Tax Administration Bureau. Among these formal enterprises, only 6.0% of them acceded to the formal financial system in 2017, decreasing from 6.6% in 2016. The reason behind this decrease is that the amount of formal enterprises created on 2017 was faster than years before. Importantly, direct government loans —public banks— increased by 32.8%.

In a geographical context, 53.8% of these formal SMEs that acceded to the financial system were from the capital city of Lima. In terms of economic sectors, services and retail sectors concentrate around 76.9% of all outstanding balances, while the fishing sector only amounts to 0.7% of all outstanding balances for instance. It is important to note that it is not necessary for an enterprise to be formal in order to obtain a formal credit, because they can get it as individuals.

Table 33.1. Scoreboard for Peru

Indicator

Unit

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs*

PEN billion

16.20

18.65

21.88

24.77

28.21

30.37

32.57

42.65

Outstanding business loans, total

PEN billion

71.41

81.29

87.57

104.22

120.35

139.38

146.39

151.13

Share of SME outstanding loans*

% of total outstanding business loans

22.69

22.95

24.98

23.77

23.44

21.79

22.25

28.20

New business lending, total

PEN billion

3.99

2.64

2.12

2.78

3.70

1.13

3.03

..

New business lending, SMEs

PEN billion

3.41

2.29

1.88

2.26

3.30

0.82

2.77

..

Share of new SME lending

% of total new lending

85.42

86.77

88.61

81.27

89.39

72.85

91.68

..

Government loan guarantees, SMEs

PEN million

..

..

..

..

..

..

400

..

Direct government loans, SMEs

PEN million

26

20

26

143

224

234

268

356

Non-performing loans, total

% of all business loans

1.93

1.55

1.41

1.56

1.79

1.98

2.29

2.75

Non-performing loans, SMEs

% of all SME loans

7.82

6.31

5.21

6.27

6.99

8.42

9.07

9.05

Interest rate, SMEs

%

27.81

25.08

24.41

22.91

22.36

22.83

23.48

23.1

Interest rate, large firms

%

7.15

8.29

9.06

8.46

8.32

7.90

8.26

8.4

Interest rate spread

% points

20.66

16.79

15.35

14.45

14.05

14.93

15.22

14.6

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

37.82

47.13

58.98

..

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

5.07

5.25

..

..

Utilisation rate

SME loans used/ authorised

..

..

..

..

94.93

94.75

..

..

Non-bank finance

Leasing and hire purchases

PEN million

3 267

3 723

4 182

3 807

3 955

3 691

3 540

3 267

Factoring and invoice discounting

PEN million

675

679

657

697

717

740

786

675

Other indicators

Bankruptcies, all businesses

Number

..

..

..

..

69 427

89 982

85 190

83 079

Note: *Preliminary data.

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

34. Poland

SMEs play a major role in the Polish economy. In 2017, Polish SMEs employed over 6.7 million employees – 68.3% of all enterprise employees – and accounted for 55.6% of value added by all enterprises and 46.3% of all investment outlays.

The stock of SME loans increased for the fourth year in a row, and currently accounts for 56.4% of total business lending. The majority of SME loans are long-term loans.

The share of SME non-performing loans decreased for the fifth year in a row in 2017, although it remains slightly higher than the share of non-performing loans for all businesses.

Venture capital and growth investments have increased by 41.2% in 2017 – although growth capital investments fell by 3% – a movement that was mainly driven by a substantial increase in venture capital, which almost doubled.

For the first time since 2012, SME interest rates slightly increased compared to 2016, from 2.86% to 2.95%. Since its peak in 2008, it has decreased by 251 basis points to 2.86% in 2016, before the 2017 increase. Interest rates for large enterprises followed a similar pattern and stood at 2.8% in 2017. Interest rate spread has remained under 0.5 percentage points for the entire reference period and has averaged 0.1 percentage points since 2011.

Multiple instruments supporting SMEs’ access to finance are available in Poland, both at the national and at the regional level. Under the De Minimis Guarantee Scheme, SMEs can obtain loan guarantee covering up to 60% of the loan amount, up to a maximum of PLN 3.5 million. Since its launch in 2013, over 140 000 SME entrepreneurs have been granted with a guarantee under this scheme, with over 268 000 guarantees awarded thus far.

Guarantees and other forms of financial support for SMEs are also offered under European Union (EU) cohesion funds as well as other EU programmes (e.g. Programme for the Competitiveness of Enterprises and small and medium-sized enterprises - COSME, Programme for Employment and Social Innovation - EaSI).

Table 34.1. Scoreboard for Poland

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

PLN billion

.. 

125.3

127.2

127.0

159.0

164.8

163.9

175.6

185.8

193.6

206.6

Outstanding business loans, total

PLN billion

..

233.3

222.1

219.7

264.5

272.2

278.0

300.9

327.3

344.9

366.0

Share of SME outstanding loans

% of total outstanding business loans

..

53.72

57.29

57.81

60.12

60.54

58.97

58.36

56.77

56.14

56.44

Outstanding short-term loans, SMEs

PLN billion

..

31.9

31.2

31.5

38.4

39.9

37.4

40.5

41.6

42.8

43.9

Outstanding long-term loans, SMEs

PLN billion

..

90.2

93.2

93.7

116.2

122.2

123.4

130.3

138.3

145.1

156.4

Share of short-term SME lending

% of total SME lending

..

26.15

25.10

25.17

24.86

24.60

23.24

23.70

23.12

22.79

21.93

Government loan guarantees, SMEs

PLN billion

..

..

..

..

..

..

7.0

9.7

8.9

9.4

10.6

Government guaranteed loans, SMEs

PLN billion

..

..

..

..

..

..

12.2

17.4

15.9

16.4

18.7

Non-performing loans, total

% of all business loans

..

6.50

11.58

12.40

10.37

11.78

11.61

11.33

10.31

9.11

8.28

Non-performing loans, SMEs

% of all SME loans

..

7.46

13.35

14.59

12.33

13.06

12.99

12.75

12.29

10.97

10.04

Interest rate, SMEs

%

..

5.37

3.82

4.31

4.57

4.86

3.85

3.52

3.00

2.86

2.95

Interest rate, large firms

%

..

5.62

4.28

4.00

4.45

4.74

3.83

3.40

2.90

2.77

2.87

Interest rate spread

% points

..

-0.25

-0.46

0.31

0.12

0.12

0.02

0.12

0.10

0.09

0.08

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

..

..

..

..

38.92

30.33

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

..

..

..

..

..

78.55

80.12

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

..

..

..

..

..

37.20

31.78

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

..

..

..

66.44

61.83

Non-bank finance

Venture and growth capital

PLN million

141.0

96.7

70.7

112.7

197.5

125.3

219.1

94.3

108.3

134.5

189.9

Venture and growth capital (growth rate)

%, Year-on-year growth rate

.. 

-31.42

-26.93

59.44

75.28

-36.55

74.80

-56.95

14.80

24.25

41.18

Leasing and hire purchases

PLN billion

27.1

24.1

28.9

21.4

27.8

26.9

30.4

34.3

37.8

51.0

58.2

Factoring and invoice discounting

PLN billion

30.2

45.5

51.4

88.6

94.9

113.1

132.4

152.7

165.3

192.7

222.5

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

35. Portugal

In 2017, SMEs comprised 99.7% of enterprises in Portugal, employed 73.4% of the labour force and were responsible for 59% of the turnover of the non-financial business economy.

In 2017, the global stock of business loans further decreased by 4.6% year-on-year, slightly above the decrease in SME lending which stood at 4.3%, after the decline of 2016 (-2.1% for total loans and -2.0% for SME outstanding loans). The share of SME loans in total business loans remained slightly above 86% since 2015. It should be noted that the share of SME loans is above 80% since more than a decade.

The decline in SME lending was more pronounced in short-term SME loans, having dropped by 62% over the 2010-17 period, but registered a decrease of 1.4% in 2017 compared to the previous year, whereas long-term SME loans decreased 3.3% year-on-year.

The share of government guaranteed loans in total SME loans grew significantly, from 5.4% in 2009 to 9.5% in 2017, demonstrating the sustained public efforts to support SMEs’ access to finance.

The average interest rate for SME loans decreased to 3.4% in 2017, marking the fifth year in a row of decline, after the 2012 peak of 7.6%. The interest rate spread between SMEs and large firms increased from 1.9 to 2.2 percentage points between 2009 and 2012, and decreased since then, to 1.28 percentage point in 2017, indicating an improvement in SME financing conditions.

After a continuous decline in venture capital investments since 2007, there were signs of recovery since 2012. Total venture capital investments in 2015 increased again to EUR 70 million, +438% compared to their 2011 value. Nevertheless, in 2016 the amount of venture capital invested dropped again to 15 million, a 78% decrease compared with the previous year, but registers a recovery in 2017, with an increase of 33.8% year-on-year.

Payment delays rose from 35 days in 2009 to 41 days in 2011, and then almost halved again from 40 days in 2012 to 20 days in 2015, and remained stable since then.

Following four years of continuous increase (2009-12) in the number of bankruptcies, 2017 ended with a new 17% reduction from 2016, with 3008 bankruptcies, below pre-crisis levels.

SMEs’ access to finance has been a major priority for the government. In this context, several “SME Invest / Growth and Capitalizar” credit lines to facilitate SMEs’ access to credit were issued. These credit lines have a total stock of EUR 18.2 billion, and have long-term maturities (up to 7 years). They also offer preferential conditions, such as subsidised risk-sharing public guarantees, which cover between 50% and 75% of the loan. These credit lines aim to support fixed investment as well as SME working capital.

On the equity side, several venture capital funds and business angels co-investment vehicles have been implemented, totalling EUR 270 million for venture capital investments in the start-up and expansion phases (2017-2020).

The Portuguese Government approved a strategic program, “Capitalizar”, to support the capitalization of Portuguese companies, relaunch investment and facilitate SMEs’ access to funding, mainly through:

  • Financial instruments of direct or indirect participation in companies;

  • Special financing instruments to quasi-equity capital;

  • Tax measures to encourage firm capitalization.

Table 35.1. Scoreboard for Portugal

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

EUR billion

83.8

91.7

92.3

90.8

87.0

79.8

73.6

70.9

68.1

66.8

63.9

Outstanding business loans, total

EUR billion

102.0

112.4

114.0

111.5

107.3

98.8

91.8

86.3

79.0

77.3

73.8

Share of SME outstanding loans

% of total outstanding business loans

82.17

81.57

80.96

81.45

81.13

80.75

80.13

82.19

86.2

86.4

86.6

New business lending, total

EUR billion

64.3

61.8

46.3

45.6

45.0

45.6

49.1

41.2

33.8

29.8

28.8

New business lending, SMEs

EUR billion

28.9

26.4

23.1

9.0

14.2

12.5

11.9

11.9

11.9

11.3

10.9

Share of new SME lending

% of total new lending

44.90

42.78

49.97

19.72

31.63

27.52

24.16

28.79

35.20

37.88

37.74

Short-term loans, SMEs

EUR billion

..

.. 

28.9

26.7

23.8

16.7

14.2

11.4

9.8

10.2

10.1

Long-term loans, SMEs

EUR billion

..

.. 

58.8

59.2

56.1

53.2

47.8

47.3

46.1

44.6

43.1

Share of short-term SME lending

% of total SME lending

..

.. 

32.94

31.09

29.77

23.91

22.94

19.41

17.48

18.69

18.99

Government guaranteed loans, SMEs

EUR billion

..

.. 

5.0

6.8

6.1

5.7

5.8

5.5

5.6

5.7

6.1

Non-performing loans, total

% of all business loans

1.83

2.44

4.22

4.59

6.94

10.54

13.46

15.05

15.91

15.85

14.91

Non-performing loans, SMEs

% of all SME loans

4.14

4.38

4.95

5.41

8.18

12.33

15.77

17.32

17.92

17.88

16.69

Interest rate, SMEs

%

7.05

7.64

5.71

6.16

7.41

7.59

6.82

5.97

4.6

3.83

3.42

Interest rate, large firms

%

5.29

5.92

3.84

3.91

5.4

5.43

4.97

4.37

3.25

2.69

2.14

Interest rate spread

% points

1.76

1.72

1.87

2.25

2.01

2.16

1.85

1.6

1.35

1.14

1.28

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

.. 

85.95

86.30

85.16

84.76

83.42

84.88

88.88

88.78

89.74

Non-bank finance

Venture and growth capital

EUR million

137.1

92.1

42.2

65.4

12.8

16.6

28.6

47.1

69.8

15.1

65.1

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

-32.8

-54.2

55.0

-80.4

35.9

64.4

64.7

48.2

-78.4

331.3

Leasing and hire purchases

EUR billion

..

.. 

5.3

5.2

3.4

3.0

2.7

2.4

2.3

2.3

2.2

Factoring and invoice discounting

EUR million

..

.. 

621

733

402

338

376

476

547

441

421

Other indicators

Payment delays, B2B

Number of days

39.9

33

35

37

41

40

35

33

21

20

20

Bankruptcies, SMEs

Number

2 612

3 528

3 815

4 091

4 746

6 688

6 030

4 019

4 714

3 620

3 008

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

35.1

8.1

7.2

16.0

40.9

-9.8

-33.3

17.3

-23.2

-16.9

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

36. Russian Federation

SMEs in the Russian Federation are defined differently than in EU countries, hindering accurate international comparisons.

There are more than 5.9 million micro, small, and medium-sized enterprises in Russia (as of September 2018), accounting for about 22.3% of GDP and employing around 26.3% of the workforce.

New SME loans doubled between 2008 and 2013, but decreased in 2014 (-6%), 2015 (-28%) and 2016 (-3%). This trend reversed in 2017, as new SME loans increased by 15 %.

Lending conditions tightened considerably in 2014-2015, with an increase of the central interest rate from 5.5% to 17%, but this trend reversed in 2016-2017, when interest rates sharply decreased as a result of a decline in the level of inflation, and the launch of state programs of preferential lending for SMEs.

The interest rate spread between loans charged to SMEs and to all non-financial enterprises increased in 2015, sharply reduced in 2016, and slightly increased again in 2017 to 1.43 percentage points.

The share of non-performing SME loans doubled between 2013 and 2017 from 7.08% to 14.93% of all SME loans.

In contrast with many countries, venture capital activities have been on the increase between 2008 and 2013, with investments doubling over this period. Venture capital investments slightly declined in 2014 and further diminished in 2015-2016, which is associated with the Russian ruble depreciation and the withdrawal of some foreign investors from the Russian market. However, venture capital investments slightly grew in 2017.

Since 2005, the Ministry for Economic Development of Russia has been implementing the State SME Support Program, with a budget of RUB 154.7 billion between 2009 and 2017. Since 2016, at least 10% of the support program is targeting SMEs in single-industry cities.

In 2015 was established the Federal Corporation on SME Development. The corporation together with its subsidiary SME Banks and regional guarantee organisations provided guarantees for RUB 140.9 billion in 2017.

In the second half of 2017, a new State support programme was launched, under which interest rates on commercial bank loans to SMEs are subsidized. To improve SMEs’ supplier role of the largest companies, the Government of the Russian Federation set a 18% quota for SMEs in procurement of large companies with state ownership.

Table 36.1. Scoreboard for the Russian Federation

Indicator

Unit

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

RUB billion

2 523

2 648

3 228

3 843

4 494

5 161

5 117

4 885

4 469

4 170

Outstanding business loans, total

RUB billion

12 997

12 412

13 597

17 061

19 580

22 242

27 785

29 885

28 204

29 219

Share of SME outstanding loans

% of total outstanding business loans

19.41

21.33

23.74

22.53

22.95

23.20

18.42

16.35

15.84

14.27

New business lending, total

RUB billion

..

18 978

20 662

28 412

30 255

36 225

38 530

34 236

35 580

38 453

New business lending, SMEs

RUB billion

4 090

3 003

4 705

6 056

6 943

8 065

7 611

5 460

5 303

6 117

Share of new SME lending

% of total new lending

15.82

22.77

21.31

22.95

22.26

19.75

15.95

14.90

15.91

Government loan guarantees, SMEs

RUB billion

..

..

..

24

28

30

22

..

100

138

Government guaranteed loans, SMEs

RUB billion

..

..

..

51

62

65

48

..

172

234

Non-performing loans, total

% of all business loans

5.83

5.43

4.30

4.57

4.31

4.59

5.61

6.91

6.66

Non-performing loans, SMEs

% of all SME loans

2.93

7.56

8.80

8.19

8.39

7.08

7.71

13.64

14.23

14.93

Interest rate, SMEs

%

..

..

..

..

..

..

16.09

16.44

13.03

10.84

Interest rate, large firms

%

..

..

..

..

..

..

12.94

12.95

11.70

9.41

Interest rate spread

% points

..

..

..

..

..

..

3.15

3.49

1.33

1.43

Non-bank finance

Venture and growth capital

RUB million

14 327

15 192

16 787

20 092

24 126

26 251

25 990

22 372

19 862

21 205

Venture and growth capital (growth rate)

%, Year-on-year growth rate

39.71

6.04

10.50

19.69

20.08

8.81

-0.99

-13.92

-11.22

6.76

Leasing and hire purchases

RUB billion

..

..

..

..

1 860

2 530

2 900

3 200

3 100

3 200

Factoring and invoice discounting

RUB billion

..

..

361

496

880

1 450

1 890

2 060

1 845

2 080

The full country profile is available at

Https://doi.org/10.1787/fin_sme_ent-2019-en

37. Serbia

SMEs dominate the Serbian business economy, accounting for 99% of all enterprises. In 2016, SMEs employed more than 65% of the labour force and accounted for 56% of total gross value added and for 41% of total exports. Sector-specific data indicates that most SMEs belonged to the trade industry (28.2%), followed by the manufacturing sector (15.7%), professional, scientific and innovative activities (12.3%), and transportation and storage (10.2%).

Results from the 2017 SME lending conditions survey conducted by the National Bank of Serbia indicate that SME financing conditions continued to improve, prolonging a trend that started in 2014. These improvements are linked to the country’s achievement and maintenance of a more macro-economically stable environment, as well as to the Central Bank’s relaxation of monetary policy and to improved resolutions for dealing with NPLs, which have lowered the country’s risk premium.

In 2017, new bank lending to SMEs increased 16.1% compared to 2016. The share of new SMEs loans among total corporate loans likewise increased by nearly 3 percentage points to 42.8%in 2017. The stock of SMEs loans in 2017 increased by 4.6% year-on-year to EUR 5.8 billion. As a result, the share of outstanding SME loans in total corporate loans remained at 30%. The share of long-term loans in total SMEs loans accounted for 75%.

Lending conditions as expressed through interest rate levels continue to improve. Interest rates for SME loans in or indexed to foreign currencies decreased to 4.7% in 2017 (from 5.7% in 2016 and 6.3% in 2015), lowering the interest rate spread between loans to large companies and loans to SMEs to 2 percentage points (from 2.6 percentage points in 2016). On the Serbian dinar-denominated loans side, interest rates on SME loans decreased faster than interest rates on loans to large companies. Thus, the interest rate spread on Serbian dinar-denominated loans is even lower and amounts to only 1.3 percentage points. More specifically, interest rates on Serbian dinar-denominated loans to SMEs declined from 8.9% in 2016 to 6.4% in 2017.

The rejection rate (that is, the percentage of SME loan applications rejected) was 28.6% in 2017, almost the same as in 2016 (28.1%), while the utilisation rate (the percentage of used SME loans among all SME loans that were approved) increased to 90.6% in 2017 (from 88.1% in 2016). At the same time, the number of loans requiring collaterals (excluding bills of exchange) increased in 2017 to 55.3% (from 42% in 2016).

The share of NPLs in total SMEs loans m