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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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:
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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.
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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.
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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.
The full country profile is available at
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.
The full country profile is available at
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:
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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.
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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.
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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.
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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.
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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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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).
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
The full country profile is available at
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.
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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.
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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.
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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.
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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.
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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.
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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).
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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:
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Financial instruments of direct or indirect participation in companies;
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Special financing instruments to quasi-equity capital;
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Tax measures to encourage firm capitalization.
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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.
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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 more than halved in 2017 compared to 2016 and stood at 9.9% (from 20.2% in 2016). This is a strong signal supporting the successful implementation of the NPL Resolution Strategy, which not only affected the SME segment but the whole corporate sector, whose NPL share decreased to 10.4% in 2017 from 17.2% in 2016.
Finally, the government’s focus on regulating alternative financing means for SMEs and maintaining macroeconomic stability is expected to continue improving lending conditions for SMEs and increase their financing options. The results of the Qualitative Bank Lending Survey conducted by the National Bank of Serbia and the European Investment Bank in 2018 have already indicated that credit standards and conditions for SMEs are improving.
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38. Slovak Republic
SMEs dominate the Slovak economy, comprising 99.5% of all enterprises in 2017, while its number increased by 19.2% in 2017. The largest year-on-year growth in the number of new businesses was achieved by micro-enterprises, which grew by 20.3% over the year.
After having risen between 2013-16, the amount of outstanding business loans slightly declined by 3.5% in 2017, reaching EUR 13 051 million. More than half of SMEs´ outstanding business loans were long-term (EUR 7 609 million), while short-term loans accounted for 41.7% (EUR 5 442 million) of SMEs´ outstanding business loans.
Interest rates on SME loans fell from 3.8% in 2012 to 3% in 2017. This improvement in SMEs’ access to credit financing indicates that credit conditions have been gradually improving over the reference period.
Venture and growth capital declined 83% in 2017 and totalled EUR 2.9 million. This steep decline is primarily due to the closure of funding support under the JEREMIE initiative over the 2007-13 programming period. SMEs being funded under JEREMIE for the 2014-20 programming period have not yet received support.
Average business-to-business (B2B) payment delays remained stable in 2017. Compared to 2015, average B2B payment delays decreased by 5 days in 2017. The share of non-performing SME loans among all SME loans was higher (6.7%) than the share of non-performing loans among all business loans (3.1%) in 2017. Both shares, however, decreased on a year-on-year basis in 2017.
A total of 285 SMEs went bankrupt in 2017 (99.3% of all bankruptcies). Despite having declined over 2014-16, SME bankruptcies slightly increased in 2017 (by 4.4%).
The government has introduced several policies that seek to improve SMEs’ access to finance. Primarily, these consist of loan and guarantee provisions to SMEs by specialised state banks (The Slovak Guarantee and Development Bank and Eximbank), and the Slovak Business Agency (SBA).
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39. Slovenia
Slovenian SMEs employ 72% of the workforce in the business economy (436 000 persons employed), and produce 64% of the value added (EUR 13 billion). Micro firms account for more than one third of all employment in the business economy, while the share of large firms in both employment and value added are below the OECD average, in line with the small size of the economy.
Firms manufacturing coke and petroleum are comprised only of SMEs. Otherwise, SMEs dominate mostly the service sector in terms of employment. Relative to the OECD average, the share of SMEs is significantly higher in the ICT sector and in manufacture of machinery. On the other hand, employment in textiles and apparel and in electrical equipment manufacturing activities is relatively more concentrated in large companies. (OECD, forthcoming publication).
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40. South Africa
Although estimates vary, the number of micro, small and medium enterprises (SMEs) in South Africa rose by 3%, from 2.18 million in the first quarter of 2008 to 2.25 million in the second quarter of 2015 (Bureau for Economic Research (BER), 2016). Of the 2.25 million SMEs, 1.5 million were informal, concentrated in the trade (wholesale and retail) and accommodation sector.
The evidence regarding firm dynamics in South Africa suggests that scaling up is a significant challenge for most SMEs. For instance, average annual growth rates are positively related with firm size, such that larger firms exhibit higher average growth. Lack of access to markets, technology, business infrastructure, information etc., are some of the constraints for SMEs scaling up.
According to the South African Reserve Bank data on bank statistics, total SME credit exposure to banks was ZAR 617 billion at the end of 2017, which accounts for 28% of total business loans. As indicated below, the low level of SME financing appears to be emanating from the demand side as the vast majority of SMEs indicates that they do not borrow from financial institutions, particularly banks.
Owner-funded capital represents, by far, the most widely used source of finance, followed by investments by family and business partners.
SME non-performing loans in the banking sector have declined since 2010, falling from 5.2% to 2.5% in 2017. The economic recovery following the 2009 recession and prudent lending criteria have likely contributed to the improvement. At 2.53% in 2017, the ratio of non-performing loans of SMEs was higher than that of total corporates (1.3%) by more than one percentage point.
Government funding for SMEs is provided through grants and financing by development finance institutions (DFIs). The outstanding direct government loans to SMEs at the end of 2017 amount to ZAR 11.48 billion, which accounted for 1.8% of all SME loans.
Credit guarantees are also in use in South Africa. ZAR 297 million were provided in 2017 by the IDC and SEFA up from ZAR 243 million in 2016, after having declined significantly in 2013 and in 2014.
The South African Government is also working on the establishment of a registry for movable assets and of a database with credit information. Both initiatives aim to make lending less risky and should therefore make bank financing more widely available.
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41. Spain
As of December 2015, 99.7% of all non-financial corporations (NFCs) in Spain were SMEs, employing 63.8% of the business labour force. Of these, micro-enterprises dominated with a share of 90.3% of all enterprises.
The Spanish economy continued to grow at a high rate in 2017. GDP grew by 3.1%, just slightly below 2016. A growth in employment brought the unemployment rate down to 16.12% in Q1-2018, from 18.6% at the end of 2016. Spain continued to maintain a high level of net lending to the rest of the world, which amounted to 2.0% of GDP.
SME lending contracted dramatically after the financial crisis. The recovery of activity and business performance of non-financial corporations in general, and of SMEs in particular, which began to take hold in 2014, continued in 2017, as did the improvement in their financing conditions.
Short-term loans continue to grow as a percentage of total loans. In the case of SMEs, at end-2017, 88.6% of lending was short term, which is a higher share than for large corporations and implies that SMEs are more dependent on credit institutions in the refinancing process than large enterprises.
As regards SME credit conditions, the trend of declining interest rates and interest rate spreads, along with a stabilisation of credit conditions, initiated in 2012, continued. The interest rate spread between loans to SMEs and large corporates also continued to narrow over the same period, progressively falling from the peak 230 basis points (bp) in 2012 to 59 bp in 2016.
By contrast, a slight downtrend was apparent in government assistance over the last three years. General government financing to non-financial corporations, preferentially SMEs, showed a very moderate decrease. This was, however, compatible with a greater availability of liquid funds and easier credit conditions from private-sector banks, so that SMEs found it easier to access private credit rather than public financing.
The economic recovery and the higher demand, along with improved credit conditions, were also evidenced in lower company mortality. This was also favoured by various insolvency legislation reforms that have stimulated agreements between creditors and the business continuity.
The latest available information on venture capital investments which relates to 2017, indicates equity financing and the related investments with respect to the seed, start-up and expansion stages in that year increased by 23.2% from 2016, reaching EUR 1 740 million.
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42. Sweden
In 2016, of all the limited liability companies with employees in Sweden, 99% were SMEs. They accounted for 60% of employment and 49% of value added.
The stock of SME debt to banks and other financial institutions was SEK 1 173 billion in 2016, up by 9% in comparison to 2015. SME debt as a share of total outstanding debt was 40% in 2016, up by 3 percentage points compared to the previous year.
Surveys of bank managers’ views on business loan volumes indicate that loans to SMEs have increased since Q1 2012 and continue to increase; this development corresponds with decreasing interest rates on bank loans over the period.
The Swedish Central Bank (Sw. Riksbanken) continuously increased the repo rate6 until the eve of the financial crisis. The rate was increased to 4.8% just a week before the fall of Lehman Brothers in September 2008. As the crisis hit, the rate was lowered gradually until it reached a low of 0.25%. The repo rate remained at 0.25% until the end of 2010 when the Central Bank began increasing it again. The repo rate reached 2% in mid-2011. Since then, it has not increased. In February 2015, the Central Bank, for the first time, introduced a negative policy rate (of -0.1%). The rate has since decreased further, remaining at -0.5% since February 2016.
Private equity fund investments in Swedish companies in the venture and growth stages were EUR 338 million in 2017, up 28% since the previous year. Alternative finance volumes7 in Sweden totalled EUR 86.48 million in 2016, a 548% increase from 2015.
Almi’s lending decreased by 23% to SEK 2 559 million in 2017. The Swedish National Export Credits Guarantee Board issued guarantees totalling SEK 1.8 billion to SMEs in 2017, a decrease of 28% from 2016. Regarding new policy developments in SME financing, the Swedish parliament (Riksdag), in June 2016, adopted a proposal to address the structure of public financing for innovation and sustainable growth (the government’s bill 2015/16:110). A primary aim of the revised public financing structure is to clarify and simplify the system of state venture capital (VC) financing. The new structure also aims to utilise more efficiently public resources within the area and thereby contribute to the development and renewal of Swedish industry. A key feature of the new structure is the establishment of a new joint stock company, Saminvest AB, a fund of funds that invests in privately managed VCs focusing on development-stage companies. Saminvest AB began operations in 2017 and as such little performance data exists to draw conclusions regarding its success.
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43. Switzerland
Only 0.8% of all Swiss enterprises are large and SMEs continue to dominate the enterprise landscape, constituting 99.2% of all firms.
Switzerland experienced a real GDP growth of 1.1% in 2017, a decline of 0.3 percentage points from 2016.
Total outstanding SME loans rose 2.4% in 2017 to reach CHF 422 billion, a higher growth rate compared to the 2016 figure of 2.1%.
Over the 2007-17 period, SME loans expanded by 30.6%, while overall corporate lending rose 37%.
Lending standards loosened in 2017, while demand for credit slightly decreased.
The average interest rate charged to SMEs increased in 2017 to 2.09% after the 2016 decrease, while the interest rate spread between large and small companies remained stable at 79 basis points.
Venture and growth capital investments experienced a large increase of 221.3% in 2017, following a 6.21% contraction in 2016.
Crowdfunding activities are increasing rapidly (+192% in 2017), despite the lack of specific crowdfunding legislation. Recently, the government has taken steps to make the regulatory framework friendlier to the industry, and particularly to financial technology companies.
Payment delays in the business-to-business sector have significantly decreased over the last few years, from 12 days in 2008 to 7 days in 2017, illustrating that liquidity problems have diminished.
In Switzerland, there are four guarantee cooperatives that help promising SMEs obtain bank loans of up to CHF 500 000. Loan guarantee volumes increased steadily over 2007-10, declined slightly in 2011, and continued to grow in the ensuing five years. The guarantee scheme was restructured in 2007, allowing it to cover more risks, which resulted in an increase in guarantee volumes. Currently the Federal Council is undergoing an amendment to the Federal Law on Financial Aid for guarantee organisations, which would allow for guarantees up to CHF 1 million.
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44. Thailand
In 2016, there were approximately 3.01 million SMEs in Thailand, which constituted 99.7% of all enterprises. They altogether contributed to 42.2% of the country's GDP and accounted for 78.5% of total private sector employment.
According to the criteria defined by the Ministry of Industry, SMEs are categorized by the number of employees and the value of total fixed assets (excluding land).
SMEs are able to access financing through commercial bank loans. In 2017, outstanding SME loans totaled THB 4 220 624 billion, representing 50.47% of all outstanding business loans. Furthermore, SMEs are able to source funds from other financial institutions, the capital market, crowdfunding and venture capital.
Some SMEs still face problems including collateral constraints and a lack of credit history, which limit their access to bank loans. Government policies have been put into place to address these constraints.
For example, the Thai Credit Guarantee Corporation (TCG) provides credit guarantees for viable SMEs to ensure that SMEs with insufficient collateral have access to bank loans.
Moreover, The Business Collateral Act B.E. 2558 (2015) simplified the process of security interest creation and expanded the types of collateral which SMEs can register and use to secure loans.
In addition, to boost SMEs’ financial access in a sustainable manner, the government has also launched capacity-building programmes to enhance SMEs’ competitiveness.
The full country profile is available at
45. The Netherlands
The recovery of the Dutch economy continued in 2017, with GDP showing a year-on-year growth rate of 2.9%8, and unemployment decreasing a further 1.1 percentage point to 4.9%, the lowest percentage since 20099.
After dropping modestly since 2011, new lending to SMEs went up again in 2017 to almost EUR 21 bn. Total outstanding business loans decreased by 5.9% year-on-year in 2017. However, at EUR 328 billion, the total amount of outstanding business loans is still 4.6% higher in 2017 than in 2010.
Since a peak in 2009, the share of SMEs applying for loans is rather stable, at around 20%. The percentage of requested loans authorised in full rose from 74% in 2015 to 76% in 2016 and 83% in 2017. The interest rate for small firms (2-49 employees) is higher than for large firms by 0.4 percentage point (2.9% and 2.5%). Large firms’ interest rate decreased by 70 basis points in 2017.
The total sum of venture and growth capital investments in companies in the Netherlands has gone up and down over the last decade with peaks in 2008 (EUR 575 million), 2011 (EUR 660 million) and 2017 (reaching the highest point of the period at EUR 731 million). Since 2014, the total sum of private equity investments has not been below the EUR 700 million mark.10
The average number of days to receive a B2B payment was 32 days in 2017, with the average contractual term being 27 days, as was the case in 2016. The average number of days of delay to receive a B2B payment therefore remains 5 days, a decrease from 2015 by one day, and a considerable decrease compared to preceding years. The number of bankruptcies continued to decrease in 2017, with a year-on-year decrease of 25.2%. The number of bankruptcies is at approximately the same level as in 2007.
Several programmes exist to support the access to finance of SMEs. These include different guarantee schemes, like the Guarantee Scheme for SMEs (BMKB) the Growth Facility (GFAC) or the Guarantee for Entrepreneurial Finance (GO). Qredits, a microcredit institution, introduced SME loans of various sizes in 2013.In 2015, Dutch institutional investors founded the Dutch Investment Institution (NLII), which will be ending in 2018. In addition, the Netherlands is creating a National Promotional Institution, Invest-NL, whose aim is, among others, to help SMEs by financing or developing viable business cases.
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46. Turkey
SME lending grew steadily over the whole 2007-2017 period, with the exception of a minor decline of 1.6% in 2009. SME loans grew by 22% in 2017. The share of SME loans in the total business loans remained broadly stable, at 32%; slightly below the scoreboard median (38%).
Venture and private equity investments show an erratic pattern. After reaching a peak in 2011, investments remained subdued in the years after. In 2017, investments surpassed 2011 levels for the first time, experiencing a 27% increase from 2016.
Non-performing loans (NPLs) ratio for both business loans and SME loans declined in 2017, at 2.81% and 4.71% respectively. Nevertheless, this decrease only partially offsets the 2016 increase, and these levels remains higher than in 2010 (previous peak).
The number of bankruptcies decreased from 222 firms in 2016 to 131 in 2017. Company closures, including sole proprietorships, totalled 42 898enterprises in2017, increased from 41897 enterprises in 2016, highlighting that bankruptcies (upon court verdict) constitute a relatively uncommon phenomenon in Turkey.
In 2012, the Turkish Government enacted a law to stimulate the development of the business angel industry. A secondary legislation came into force in 2013. The purpose of the law and the secondary legislation was the establishment of a legal framework and the provision of generous tax incentives for licensed angel investors.
The government also introduced regulation regarding fund of funds, which enables Treasury to transfer capital to a fund of funds under certain conditions.
KOSGEB constitutes the main body for executing SME policies in Turkey. It provides 13 different support programmes and supports collateral costs for SMEs with considerable outreach throughout Turkey.
New initiatives to stimulate alternative sources of finance have been introduced in Turkey in 2017. The SME Technological Product Investment Support Programme aims to support SMEs’ technological product investments through the commercialization of new products resulting from innovation activities and located in priority technology areas, to create value-added to the national economy, and to support technological product investments that enterprises will make to increase technological product exports by taking part in international markets. KOSGEB provides grants and soft loans in this programme during the investment period, as well as the following year.
Secondly, the Strategic Product Support Programme aims to provide support for investments by developing technological and production capabilities of SMEs for the re-localisation and nationalization of strategic products, thus contributing to the reduction of current account deficit. This programme also aims to improve the ability of SMEs and large enterprises to act together.
In 2016, Turkey passed a bill on movable collateral in commercial transactions. The goal of the reform is to increase access to finance against valuable tangible and intangibles assets such as receivables, machinery, inventory and stock, which comprise 78% of SMEs' total assets. This reform led to the creation of 13 089 security rights in 2017 and the first six months of 2018, amounting to 169.4 Billion Turkish Liras, 30.06 billion US Dollars and 9.3 billion Euros. The most used assets are receivables, machines and inventories respectively.
The full country profile is available at
47. United Kingdom
UK SME finance markets have seen some positive developments in the last four years, with stable levels of bank lending and strong growth in many of the commonly used alternative sources of finance in the United Kingdom.
Following a gradual decline in total outstanding bank lending stock to SMEs over five years, dipping below GBP 162 billion in H1 2016, numbers have been relatively stable and reached GBP 167 billion by Q2 2018. Gross lending to SMEs has exceeded GBP 14 billion every quarter since 2014, with cumulative new business lending totalling GBP 57 billion in 2017 (GBP 29 billion H1 2018). The trend in net lending to SMEs though has remained weak, totalling just GBP 0.7 billion in 2017 (GBP 0.33 billion H1 2018). Underlying these numbers, Bank of England Credit Conditions reports outline no change in supply, some fluctuation in demand, little change in default rates in SME markets in 2017 and early 18, with some loosening of conditions in Q2 and Q3 2018.
The combined rejection rate for SME loans and overdrafts overall has increased slightly by one percentage point over each of the last three years to 20% in 2017, albeit remaining much lower than levels reported pre-2014. Encouragingly, the annual average effective interest rate for SMEs has been falling since 2012 and remained quite low, at 3.16% in 2017, a rate spread between SME and large firms of 95 basis points, edging up to 3.39% in H1 2018 after consistent monthly hikes in the rate throughout H2 2017. SMEs renewing facilities (loans and overdrafts) are much more likely to be successful (97%), compared to those applying for new money (63%), whilst an increasing proportion of SMEs report debt finance is now secured (56%).
However, there are some key dynamics weakening SME demand for, and deployment of, external finance. Fewer SMEs are applying each year for new or renewed bank finance (just 4% in 2017, 7% in 2011), only 2% of SMEs are would-be seekers of external finance, down from 5% in 2014, and 1-2% are discouraged borrowers. Encouragingly though, 38% of SMEs are using some form of external finance and more SMEs are using non-bank finance (18% in 2017), or using retained profits and reserves to fund ambition. However, many SMEs may be foregoing potential growth due to an aversion to borrow: 82% restrict ambition to self-funded limits; 76% accept slower growth rather than borrow; whilst 47% are permanent non-borrowers.
Asset finance (leasing and hire purchase) remains the most widely-used form of alternative finance amongst SMEs, reaching GBP 18.6 billion in 2017, (+12% since 2016). Invoice finance and asset-based lending also showed strong growth to GBP 11.8 billion in 2017 (+8% on 2016). According to Invest Europe / EDC, total UK venture and growth capital investments reached GBP 3.7 billion in 2017: the increase on 2016 numbers of +45% in value, and +12% companies supported, driven by strong activity across seed, start-up and later stage ventures. British Business Bank analysis of Beauhurst data shows the number of external private equity deals has recovered from a weak 2016 (up + 6% in 2017), with investment values growing by 89% to GBP 5.9 billion in 2017, driven by larger deal sizes overall and a small number of extremely large deals.
Marketplace lending to businesses via peer-to-peer (P2P) platforms showed continued growth in 2017. Gross flows of P2P SME and P2P Invoice lending reached almost GBP 1.8 billion and GBP 0.6 billion, respective increases of 51% and 68% on 2016 numbers. An indication of the scale of business angel investments is provided by the value of raises via the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) which respectively helped smaller firms raise GBP 1.8 billion and GBP 175 million. Alternative finance, albeit comprising a relatively small proportion of SME finance overall, along with other non-bank funding, is expanding and enhancing the scale and diversity of smaller business finance markets.
The British Business Bank will receive GBP 2.5 billion of additional resources over 10 years to launch British Patient Capital, a new programme designed to enable and support a total of GBP 7.5 billion long-term investment in high growth potential businesses. Finally, the Bank will continue raising awareness of all finance options and working with partners to promote and increase innovation and diversity in funding provision to ensure fully-functioning SME finance markets.
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48. United States
During the 2010-2017 recovery period US real GDP posted an average annual growth rate of 2.2%. While this growth rate was slightly lower than the 2.9% average recorded during the longer Post WW II period, it was sufficient to absorb excess labor supply created during the 2008-2009 recession: The employment to population ratio rose continuously from 42 percent during march of 2010 to 45 percent during July of 2018, not far from the recent peak ratio 47 percent recorded during March of 2000. During this period, the index of real output per hour posted an average annual growth rate of 0.7 percent, while the index of real compensation per hour posted an average annual growth rate of 0.6 percent.
Net formation of employer firms and employer SMEs rebounded modestly since 2012, but as of 2015 they both stood 2.5 percent lower than their peak 2007 levels. However, Bureau of Labor Statistics point to a continued growth during 2016 and 2017 with levels surpassing 2007 highs.
SME loan origination (flow data) indicates the new supply of loans to SMEs posted solid gains from October 2009 through September 2015, but then declined during the next sixteen months, bottoming during February 2017. Stock data show the value of small loans going to businesses declined continuously from 2008Q2 to 2013Q3, but then posted a modest recovery thereafter. As of the end of 2017, the value of small business loans outstanding was still 12 percent lower than peak 2008 level. The number of small business loans recorded a similar patter, and as of yearend 2017 were still 6 percent lower than peak 2008 levels. The divergent patterns between flow and stock data may imply that while financial institutions have increased new SME loan originations, SME loan draw-downs outpaced new originations.
Since early 2010 bankers have been loosening lending standards for loans to large firms and SMEs, and SME surveys report that loan availability is near historical highs. However, the same data sources point to soft demand for SME loans. Interest rates for SME loans posted dramatic declines during 2006Q3 to 2009Q3, and then posted a flat to modest downward trend up to 2015Q4, when they started to rise. As of 2018Q3 interest rates on SME loans stood at 5.0 percent.
At $31.6 Trillion, SBA’s loan guarantees surpassed previous peak levels. The number of guarantees have underperformed their dollar value, but none the less, as of the end of 2017 stood about 24 percent higher than 2009 lows. Like other SBA capital access programs, SBIC financing rebounded strongly during the 2010-2015 period, reaching $6.3 Billion during 2015, more than tripling the $1.9 Billion low recorded during 2009. More recently, and partly mirroring the decline in the overall VC market, the SBIC program experienced a 4.7 and 4.4 percent decline during 2016 and 2017 respectively. The pattern of venture capital deals mirrors the pattern seen in the SME loan markets, where the number of contracts underperform their dollar value. As of 2017, the number of VC deals has not surpassed the 2014 high of 10,509, all the while their dollar value as of 2017 stood at 81.9, close to the 2015 high of $82.2 billion.
Total bankruptcy filings have been on a continuous decline since 2011. Business bankruptcies started their continuous decline a year earlier. As a result, business bankruptcies during 2017 were 62 percent lower than 2009 peak levels. Delinquency rates of SME loans are at or near historical lows, with 31-90 days delinquency rates ranging 1.0-1.5 percent, and 91-180 delinquency rates remaining below 0.5 percent.
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← 1. https://www.bcb.gov.br/htms/selic/selicdiarios.asp
← 2. Average TRM (Representative Market Exchange Rate) of 2017= COP 2.951,32
← 3. Ministry of Cooperatives and SMEs of The Republic of Indonesia, 2018.
← 4. Preliminary data.
← 5. Preliminary data.
← 6. The repo rate is the rate of interest at which banks can borrow or deposit funds at the Riksbank for a period of seven days. The repo rate has been the Riksbank's policy rate since 1994.
← 7. Alternative finance includes crowdfunding, P2P lending and other alternative finance intermediaries. (Cambridge Centre for Alternative Finance 2018)
← 8. Macro Economische Verkenningen 2019, Centraal Economisch Plan
← 9. https://opendata.cbs.nl/statline/#/CBS/nl/dataset/80590ned/table?ts=1533886271304 (Unemployment as percentage of the Dutch labour force, ‘national definition’)
← 10. The method of calculating the sum of venture and growth capital investments has changed compared to last year. Therefore, earlier figures have been updated.