copy the linklink copied!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.

    

copy the linklink copied!3. Australia

According to the Bureau of Statistics (ABS), there were 2 309 436 small and medium sized enterprises (SMEs) in Australia in 2017-18. SMEs account for 99.8% of all enterprises in Australia and employ more than 7.6 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, and has performed remarkably well in adjusting from the investment phase of the mining boom towards broader-based sources of growth. Real GDP grew by 2.9% 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 5.29% in 2018. 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. However, the interest rate spread declined to 173 basis points in 2018.

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 2018, the share of SME outstanding loans stood at 29.48% 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 11 001 million as at 30 June 2018. 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 12 529 million in 2018, an increase of about 9% 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 2018.

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.

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Table 3.1. Scoreboard for Australia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

AUD billion

188.7

203.9

203.6

223.6

234.3

238.3

241.4

250.0

260.4

270.4

280.3

285.4

Outstanding business loans, total

AUD billion

710.3

771.3

720.7

705.1

713.8

736.8

748.6

783.3

833.6

879.6

907.3

968.1

Share of SME outstanding loans

% of total outstanding business loans

26.57

26.43

28.25

31.71

32.82

32.34

32.24

31.91

31.24

30.74

30.90

29.48

New business lending, total

AUD billion

375.0

336.1

265.5

265.8

310.7

273.8

292.4

360.5

391.7

341.8

346.0

346.9

New business lending, SMEs

AUD billion

77.5

79.9

69.6

82.5

81.6

73.7

79.1

85.4

91.2

86.7

79.7

76.7

Share of new SME lending

% of total new lending

20.67

23.77

26.20

31.04

26.25

26.91

27.06

23.69

23.27

25.37

23.03

22.11

Non-performing loans, total

% of all business loans

0.50

2.07

3.27

3.55

3.16

2.68

2.03

1.39

1.01

1.13

0.78

0.81

Interest rate, SMEs

%

8.56

7.99

7.56

8.29

7.94

7.07

6.43

6.18

5.58

5.29

5.23

5.29

Interest rate, large firms

%

7.60

6.16

5.85

6.67

6.37

5.29

4.29

4.15

3.59

3.20

3.23

3.56

Interest rate spread

% points

0.96

1.83

1.71

1.62

1.57

1.78

2.14

2.03

1.99

2.09

2.00

1.73

Non-bank finance

Venture and growth capital

AUD billion

6.94

8.32

7.90

8.91

8.70

7.65

8.35

7.91

8.80

9.21

10.58

11.00

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

19.83

-4.95

12.77

-2.38

-12.05

9.10

-5.28

11.32

4.67

14.78

4.03

Leasing and hire purchases

AUD billion

9.55

9.34

6.90

7.14

7.58

8.69

7.55

8.69

10.37

9.47

11.52

12.53

Factoring and invoicing

AUD billion

54.76

64.99

63.10

58.66

61.42

63.36

63.27

62.39

64.40

..

..

..

Other indicators

Payment delays, B2B

Number of days

..

..

..

..

22

20

20

15

13

14

12

10

Bankruptcies, Unincorporated

Number

5 045

4 427

4 426

5 616

5 266

5 858

4 761

4 007

4 088

4 350

4 168

4 291

Bankruptcies, Unincorporated

Per 10 000 enterprises

42

36

36

45

43

50

42

35

34

36

34

36

Bankruptcies, Corporates

Number

7 489

9 067

9 465

9 605

10 439

10 583

10 854

8 822

10 093

8 511

7 819

8 052

Bankruptcies, Corporates

Per 10 000 companies

48

55

56

54

57

55

54

41

45

36

31

31

Bankruptcies, Total

Per 10 000 businesses

45

47

47

50

51

53

49

39

41

36

32

32

Invoice payment days, average

Number of days

53

56

54

53

54

53

54

53

47

..

..

..

Outstanding business credit, Unincorporated business

AUD billion

111

117

119

122

125

131

136

142

150

157

164

165

Outstanding business credit, Private trading corporations

AUD billion

500

555

514

500

514

524

531

556

592

626

636

663

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!4. Austria

As in many EU countries, SMEs contribute substantially to Austria’s economy. In 2017, 99.6% of all firms were SMEs employing approximately 67.4% of the labour force.

The capital structure of SMEs in Austria is traditionally biased towards debt financing, whereas limitations on access to risk-finance are still apparent. Bank lending is therefore an important factor affecting the availability of external financing for SMEs. However, access to finance is generally not a major concern for Austrian SMEs.

Since 2014, new loans for SMEs have been relatively stable, with a short setback in 2016. As new loans to all enterprises have recovered since 2016, reaching EUR 64.4 billion in 2018, the share of new SME loans in all new business loans decreased slightly to 12.7%. This development is followed by a significant decline in short-term loans (less than 6 months) since 2009. Overall, the annual growth rate of business loans to non-financial corporations has been positive and outperformed the Euro Area.

In Austria, the public sector has established various credit guarantee programmes (e.g. via public promotional banks such as the aws) to increase the willingness of banks to provide loans to SMEs as they transfer the associated risk. Therefore, bank lending to SMEs has been much more resilient and had already recovered pre-crisis levels in 2016. In the light of historically low bank lending rates, debt financing continued to be attractive, supporting lending to the corporate sector. The average base rate on new loans to non-financial corporations up to EUR 1 million, which serves as a proxy for SME interest rates, is declining since the end of 2011 and amounted to 1.82% end of 2018.

In Austria, limitations on access to risk-finance (e.g. Venture Capital) are still apparent and have always been considered to be a particular weakness of the Austrian innovation system. Official data reported by Invest Europe regularly show ups and downs and no clear trend toward an ever increasing risk-capital market size. Due to the relatively small total market volume, large single investments - mostly in the Buyout segment - have disproportional effects. In 2018, the total venture and growth capital volume was EUR 123.4 million.

In terms of bankruptcies per 1 000 firms, a stable development is recorded since 2015, with a total of 11 cases in 2018. The continuous decline of insolvencies is, however, not only a result of the current favourable economic performance of Austria, but also attributed to the low interest rates, which disproportionally benefit weak-performing, highly indebted companies.

According to the European Payment Index, the general payment behaviour in Austria - B2B as well as B2C - is better than the EU average. In 2018, the average B2B payment delay decreased slightly by 1 day and is now at +1 day. The average B2C payment delay remained unchanged at +1 day.

Recent initiatives of the Austrian Government aim at fostering access to finance for innovative, young SMEs and reducing administrative barriers to improve the start-up ecosystem:

The aws Digital and Growth Fund will be initiated as a new boost for the non-dynamic Austrian Venture Capital Market to mobilise private venture capital and trigger investments for innovative tech-startups and scale-ups. The digitalisation of various administrative procedures (e.g. e-foundation of companies) was successfully implemented to reduce the administrative burden for companies and startups in particular. The implementation of regulatory sandboxes will reduce the administrative burden for startups and SMEs, so they can try new concepts and products under market conditions within a limited period.

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Table 4.1. Scoreboard for Austria, 2010-18

Indicator

Unit

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, total

EUR billion

135.5

138.8

140.4

140.3

136.6

137.2

135.6

143.8

153.0

New business loans, total (flows)

EUR million

74 896

73 041

80 867

73 460

73 126

61 711

55 543

64 418

64 438

New business loans, SMEs (flows)

EUR million

9 414

9 476

9 347

8 884

8 237

8 116

7 499

8 304

8 182

Share of new SME loans

% of total business loans

12.57

12.97

11.56

12.09

11.26

13.15

13.50

12.89

12.70

short-term loans, SMEs (flow)

EUR million

5 139

4 944

4 901

4 536

4 016

3 345

3 010

2 539

1 998

long-term loans, SMEs (flow)

EUR million

4 275

4 532

4 446

4 348

4 221

4 771

4 489

5 765

6 184

Share of short-term SME lending

in %

54.59

52.17

52.43

51.06

48.76

41.21

40.14

30.58

24.42

Government loan guarantees, SMEs

EUR million

173

143

158

167

172

204

192

279

301

Government guaranteed loans, SMEs

EUR million

226

185

207

211

225

258

282

456

441

Government direct loans, SMEs

EUR million

607

633

539

594

490

543

454

649

545

Interest rate, SME, loans up to EUR 1m

in %

2.43

2.92

2.46

2.28

2.27

2.02

1.92

1.80

1.82

Interest rate, large firms, loans over EUR 1m

in %

1.96

2.55

1.98

1.77

1.74

1.61

1.54

1.45

1.38

Interest rate spread

in %

0.47

0.37

0.48

0.51

0.53

0.41

0.38

0.35

0.44

Non-performing loans, total

In %

..

2.71

2.81

2.87

3.74

3.39

2.67

2.37

1.88

Equity

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

EUR million

43

97

44

59

60

112

57

108

78

Venture and growth capital (growth capital)

EUR million

34

118

29

26

45

85

29

179

46

Venture and growth capital (total)

EUR million

78

216

73

86

105

197

85

287

123

Venture and growth capital (growth rate)

In %

-31.53

177.61

-66.31

17.76

22.56

87.97

-56.63

235.47

-56.94

Other

Payment delays, B2B

Days

11

12

11

12

13

4

4

2

1

Payment delays, B2C

Days

11

11

9

9

9

1

4

1

1

Bankruptcies, total

Number

6 657

6 194

6 266

5 626

5 600

5 422

5 534

5 318

5 224

Bankruptcies, per

1 000 firms

Number

18

17

17

15

15

11

12

11

11

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!5. Belarus

According to the National Statistical Committee, the Belarusian SME sector consists of 111 214 legal entities (including SOEs and companies in mixed ownership with fewer than 250 employees), which amounts to 78.3% of total businesses as of January 1 2019.

Micro, small and medium enterprises, as well as individual entrepreneurs and their employees, account for 30.7% of total employment (30.4% in 2014).

Gross value added produced by SMEs amounts to 28.8% (28.4% in 2017) and their share of GDP remains at the last year’s level, which was 24.6%.

Outstanding SME loans (in both national and foreign currencies) increased by 19%, as compared with the beginning of 2018. As of January 1, 2019, total outstanding SME loans stood at BYN 9.88 billion.

Ensuring SME access to finance is an essential component of the general business support policies of the Belarusian government.

Financial support for SMEs has two basic dimensions. First, there is state support, i.e. public funding provided by central and local budgets and by the Development Bank of the Republic of Belarus (DBRB). The second dimension of financial support for SMEs involves non-governmental support provided by commercial and non-profit entities using various forms and methods of financing.

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Table 5.1. Scoreboard for Belarus

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

BYN billion

..

..

..

..

..

..

..

7.74

8.49

7.59

8.30

9.88

Outstanding business loans, total

BYN billion

2.10

3.22

4.77

6.61

11.59

16.18

20.54

25.11

30.90

28.70

29.73

32.46

Share of SME outstanding loans

%

..

30.83

27.46

26.46

27.91

30.42

New business lending, total

BYN billion

4.11

5.95

7.43

10.96

16.63

27.07

29.23

33.03

38.31

45.10

56.99

69.33

New business lending, SMEs

BYN billion

..

..

..

..

..

..

..

10.77

12.10

13.13

18.29

26.59

Share of new SME lending

%

..

32.62

31.57

29.11

32.09

38.36

Outstanding short-term loans, SMEs

BYN billion

..

..

..

..

..

..

..

2.07

2.00

1.81

2.17

2.97

Outstanding long-term loans, SMEs

BYN billion

..

..

..

..

..

..

..

5.67

6.49

5.78

6.13

6.90

Share of short-term SME lending

%

..

26.76

23.55

23.88

26.14

30.11

Direct government loans, SMEs

BYN million

..

..

..

..

..

..

5.43

4.76

6.45

5.05

5.98

7.09

Non-performing loans, total

%

0.82

0.80

1.05

0.84

0.35

0.51

1.04

1.65

2.60

4.78

4.81

1.39

Non-performing loans, SMEs

%

..

..

..

..

..

..

..

2.06

5.18

6.95

3.34

1.71

Interest rate, SMEs

%

..

..

..

..

..

..

..

..

..

20.20

12.17

9.92

Non-bank finance

Leasing and hire purchases

BYN billion

..

..

..

..

..

..

..

..

1.05

1.11

2.10

3.39

Factoring and invoice discounting

BYN thousand

..

..

..

..

..

..

..

..

..

..

..

126.8

Other indicators

Bankruptcies, SMEs

Number

..

..

..

..

..

1725

1850

2047

2364

2410

1919

1970

Bankruptcies, SMEs (growth rate)

%

7.25

10.65

15.49

1.95

-20.37

2.66

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!6. Belgium

In 2016, SMEs dominated the business enterprise landscape in Belgium, accounting for 99.85% of all firms.

The outstanding stock of SME loans expanded 4.5% in 2018, 2.6 percentage points down from its growth rate the previous year.

SME interest rates continued to decrease, and averaged 1.6% in 2018. The interest rate spread between loans charged to large enterprises and loans charged to SMEs was 25 basis points in 2018.

Survey data illustrates that lending conditions eased between 2013 and the end of 2015, and have remained relatively stable until the end of 2018. A deterioration of credit conditions has been reported for the fourth quarter of 2018 and the first quarter of 2019.

After having receded moderately in 2017 (-3.49%), leasing volumes expanded 4.62% in 2018. Overall, factoring continues to be more widely used by Belgian companies. Factoring expanded strongly in 2018, growing 9.62% 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 17% of GDP in 2018, as opposed to only 6.3% of GDP in 2008.

Venture and growth capital investments continue to show considerable variation due to the small number of deals conducted every year. Total venture and growth capital investments decreased 5.38% in 2018, after having decreased 9% in 2017.

Average payment delays for business to business transactions decreased steadily during the last ten years. After having decreased from a 17-day average in 2009 to an 8-day average in 2017, payment delays expanded to a 9-day average in 2018.

After a steady decrease of bankruptcies during the 2014-2016 period, the number of registered failures rose to 9 968 (+8.7%) in 2017 before receding again in 2018 to 9 860 (-1.08%).

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

The Flemish region launched the Co-financing+ initiative, allowing companies to borrow up to four times their own contribution with a minimum of EUR 350 000 and a maximum of EUR 700 000.

The Brussels-Capital region launched the Bruseed initiative. Bruseed is a capital raising tool for innovative early-stage companies who provide loans, equity participations and convertible loans up to EUR 250 000.

The Federal government supported the signing of a new Code of Conduct for SME Financing. This code of conduct will contribute to improve the information provided to entrepreneurs contracting loans and limit funding loss indemnity to EUR 2 million.

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Table 6.1. Scoreboard for Belgium

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

EUR billion

82.8

89.1

88.9

93.9

100.0

109.6

109.5

100.7

104.4

108.0

115.7

121.0

Outstanding business loans, total

EUR billion

134.2

149.4

141.8

150.6

153.7

167.6

162.0

151.7

164.6

163.4

173.6

180.3

Share of SME outstanding loans

% of total outstanding business loans

61.72

59.62

62.73

62.35

65.07

65.43

67.60

66.39

63.44

66.12

66.66

67.09

Outstanding short-term loans, total

EUR billion

37.4

40.4

34.1

35.4

36.5

34.5

33.8

31.4

30.9

32.0

33.6

36.4

Outstanding long-term loans, total

EUR billion

59.7

66.1

72.2

77.2

79.3

82.5

83.9

80.3

84.8

90.8

97.8

103.8

Share of short-term lending, total

% of total business lending

38.52

37.91

32.08

31.45

31.50

29.48

28.74

28.08

26.71

26.05

25.58

25.95

Government loan guarantees, SMEs

EUR million

..

156.5

411.9

553.9

317.5

266.0

480.2

265.6

448.2

398.3

458.4

612.2

Government guaranteed loans, SMEs

EUR million

..

312.7

832.7

888.4

561.7

484.3

826.1

476.7

805.6

735.9

828.3

1130.3

Direct government loans, SMEs

EUR million

..

113.7

142.2

141.9

148.3

170.5

235.6

..

..

..

..

..

Interest rate, SMEs

%

5.45

5.70

3.01

2.51

2.88

2.32

2.06

2.09

1.83

1.72

1.66

1.60

Interest rate, large firms

%

4.72

5.05

2.09

1.70

2.22

1.74

1.76

1.77

1.60

1.34

1.40

1.35

Interest rate spread

% points

0.73

0.65

0.92

0.81

0.66

0.58

0.30

0.32

0.23

0.38

0.26

0.25

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

74.30

71.90

78.60

..

..

..

..

..

..

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

22.22

26.46

30.20

29.33

29.36

39.33

36.61

36.71

37.18

35.38

Rejection rate

1-(SME loans authorised/ requested)

..

..

0.52

5.13

6.44

10.40

10.91

5.88

5.71

6.13

5.07

5.51

Utilisation rate

SME loans used/ authorised

77.80

79.05

80.69

80.07

80.16

77.45

77.79

79.76

79.62

80.11

79.63

80.48

Non-bank finance

Venture and growth capital

EUR million

502.26

507.83

618.05

363.60

411.11

445.36

438.09

580.86

548.18

843.14

767.18

725.89

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

1.11

21.70

-41.17

13.07

8.33

-1.63

32.59

-5.63

53.81

-9.01

-5.38

Leasing and hire purchases

EUR million

4405.9

4856.4

3756.4

4005.5

4439.0

4450.2

4121.7

4356.9

4800.5

6009.6

5800.1

6 068.4

Factoring and invoicing

EUR million

19.2

22.5

23.9

32.2

36.9

42.4

47.7

55.4

61.2

62.8

69.6

76.3

Other indicators

Payment delays, B2B

Number of days

..

..

17

17

15

19

18

19

13

10

8

9

Bankruptcies, total

Number

7 680

8 476

9 420

9 570

10 224

10 587

11 740

10 736

9 762

9 170

9 968

9878

Bankruptcies, total (growth rate)

%, year-on-year growth rate

..

10.36

11.14

1.59

6.83

3.55

10.89

-8.55

-9.07

-6.06

8.77

-0.90

Bankruptcies, SMEs

Number

7 652

8 443

9 391

9 531

10 187

10 526

11 680

10 675

9 728

9 134

9 935

9 860

Bankruptcies, SMEs (growth rate)

%, year-on-year growth rate

10.34

11.23

1.49

6.88

3.33

10.96

-8.60

-8.87

-6.11

8.77

-0.75

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!7. 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 December 2018. 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. 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 Under-Secretariat for Micro and Small Enterprises (Ministry of Economy - ME) 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/ME 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.

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Table 7.1. Scoreboard for Brazil

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Outstanding business loans, SMEs

BRL billion

281.13

347.21

388.58

476.96

564.12

629.56

681.31

692.26

656.25

578.29

523.36

524.68

Outstanding business loans, total

BRL billion

506.61

689.55

780.83

935.86

1 114.03

1 286.53

1 460.03

1 623.01

1 734.61

1 565.18

1 436.38

1 440.78

Share of SME outstanding loans

% of total outstanding business loans

55.49

50.35

49.76

50.97

50.64

48.93

46.66

42.65

37.84

36.95

36.44

36.42

New business lending, total

BRL billion

..

..

..

..

..

917.83

948.01

992.11

1 027.21

817.48

735.23

813.87

New business lending, SMEs

BRL billion

..

..

..

..

..

566.88

562.21

532.2

490.9

408.98

398.48

429.13

Share of new SME lending

% of total business lending

..

..

..

..

..

61.76

59.3

53.64

47.79

50.03

54.20

52.73

Outstanding short-term loans, SMEs

BRL billion

105.57

109.37

104.07

119.57

150.72

158.58

161.9

155.96

141.47

122.28

116.75

125.36

Outstanding long-term loans, SMEs

BRL billion

160.04

200.91

240.04

309.64

386.91

469.35

518.06

534.8

513.04

454.62

403.23

396.71

Share of short-term SME lending

%

39.75

35.25

30.24

27.86

28.03

25.25

23.81

22.58

21.61

21.20

22.45

24.01

Government guaranteed loans, SMEs

BRL billion

0.07

0.08

0.11

0.05

2.21

2.01

1.74

2.02

2.84

3.27

5.05

4.14

Direct government loans, SMEs

BRL billion

10.09

11.76

13.85

14.47

17.16

18.93

22.12

24.12

27.21

29.06

30.46

29.18

Non-performing loans, total

% of all business loans

1.51

1.53

2.65

1.82

2.01

2.21

1.84

1.88

2.39

3.15

2.99

2.45

Non-performing loans, SMEs

% of SME loans

2.64

2.79

4.68

3.39

3.63

4.18

3.56

3.9

5.43

6.7

5.67

4.29

Interest rate, SMEs

%

..

..

..

..

..

19.7

23.7

25.2

34.8

31.7

25.1

21.50

Interest rate, large firms

%

..

..

..

..

..

9.0

12.0

13.3

16.4

17.4

9.0

8.60

Interest rate spread

% points

..

..

..

..

..

10.7

11.7

11.9

18.4

14.3

16.1

12.90

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!8. Canada

In 2018, Canadian small businesses (1-99 employees) constituted 98.0% of all businesses and employed 8.4 million individuals, or 69.8% of the private sector labour force.

Supply-side survey data show that outstanding debt held by all businesses increased in 2018 to CAD 898 billion. Lending to small businesses increased to CAD 105.1 billion. Small businesses’ share of total outstanding business loans was 11.7%.

Small business credit conditions have remained relatively stable since 2011. The average interest rate charged to small businesses in 2018 increased to 5.7% with an average business prime rate of 3.6%. The business risk premium reverted to its 2014 level of 2.1%, the lowest level since the 2009 recession reflecting an easing in access to financing for small businesses in Canada.

The small business 90-day loan delinquency rate has returned to pre-recession levels. In 2018, the 90-day loan delinquency rate reached 0.55%.

Total venture capital (VC) investment levels in Canada has had over eight straight years of growth reaching CAD 3.8 billion in 2017 followed by a modest decline in 2018 to CAD 3.7 billion. These are the highest levels of VC investment recorded in Canada since 2001.

In 2018-19, the Government of Canada continued its commitment to support entrepreneurship and the growth of SMEs.

The Business Development Bank of Canada (BDC), a crown corporation, with its mandate to support Canadian entrepreneurship had CAD 31 billion in financing, as of March 31, 2018, committed to 56 000 clients operating across Canada.

The government of Canada has also made CAD 450 million available for the Venture Capital Catalyst Initiative (VCCI) to increase late-stage venture capital available to Canadian entrepreneurs. VCCI will inject more than CAD 1.5 billion into the Canadian innovation capital market by leveraging funds from the public sector and private sector.

Futurpreneur Canada, a not-for-profit organisation, which provides financing, mentoring, and business support tools to young entrepreneurs, also received CAD 38 million in funding over five years, starting in 2019-20 to continue its support of Canada’s next generation of entrepreneurs.

Supporting women entrepreneurs continues to be one of the key focus areas for the government of Canada. In Budget 2018, the government announced approximately CAD 2 billion investment in the first Women Entrepreneurship Strategy. It provides support by increasing access to financing, talent, networks, and expertise to encourage more women to start and grow their businesses, as well as to work with them to move into exporting.

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Table 8.1. Scoreboard for Canada

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

CAD billion

83.4

83.4

86.4

85.7

89.1

87.2

91.1

94.0

96.1

99.2

102.5

105.1

Outstanding business loans, total

CAD billion

479.8

534.0

482.3

489.5

503.2

548.0

592.6

642.9

716.2

772.4

823.7

897.5

Share of SME outstanding loans

% of total outstanding business loans

17.39

15.61

17.92

17.50

17.71

15.90

15.38

14.62

13.42

12.84

12.45

11.71

New business lending, total

CAD billion

..

..

..

..

126.2

141.6

151.0

168.7

188.4

204.0

233.9

269.7

New business lending, SMEs

CAD billion

..

..

..

..

20.2

21.7

22.8

23.2

24.0

22.8

25.2

27.2

Share of new SME lending

% of total new lending

..

..

..

..

15.99

15.30

15.10

13.74

12.73

11.16

10.78

10.1

Outstanding short-term loans, SMEs

CAD billion

15.1

..

6.9

..

..

15.6

..

..

24.2

..

Outstanding long-term loans, SMEs

CAD billion

21.1

..

..

..

12.8

..

..

12.4

..

..

32.4

..

Share of short-term SME lending

% of total SME lending

41.62

..

43.40

36.30

35.13

39.00

46.00

55.71

47.20

36.20

42.8

30.10

Government loan guarantees, SMEs

CAD billion

1.20

1.30

1.20

1.30

1.30

1.10

1.10

1.50

1.20

1.3

1.4

1.8

Direct government loans, SMEs

CAD billion

4.40

4.10

5.50

4.70

6.00

5.80

4.60

6.50

6.70

7.9

8.0

8.4

Interest rate, SMEs

%

7.50

..

6.20

5.80

5.30

5.40

5.60

5.10

5.10

5.30

5.20

5.70

Interest rate, large firms

%

6.10

..

3.10

2.60

3.00

3.00

3.00

3.00

2.80

2.70

2.90

3.64

Interest rate spread

% points

1.40

..

3.10

3.20

2.30

2.40

2.60

2.10

2.30

2.60

2.30

2.06

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

47.7

..

56.1

66.7

64.8

76.0

56.0

66.6

80.0

74.0

64.1

70.0

Percentage of SME loan applications

SME loan applications/ total number of SMEs

17.0

..

14.0

18.0

24.0

26.0

30.0

27.0

23.0

26.0

26.0

27.0

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

9.0

8.0

7.0

9.0

12.8

7.0

9.0

9.5

9.0

Non-bank finance

Venture and growth capital

CAD billion

..

..

..

..

..

..

1.88

2.06

2.24

3.19

3.78

3.69

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

..

9.7

8.7

42.3

18.4

-2.4

Other indicators

90-Day Delinquency Rate Small business

%

0.71

1.13

1.52

0.87

0.62

0.55

0.41

0.41

0.60

0.55

0.52

0.55

90-Day Delinquency Rate Medium business

%

0.03

0.05

0.3

0.13

0.02

0.01

0.01

0.03

0.03

0.03

0.03

0.07

Leasing request rate

 %

20.8

..

1.00

2.00

7.00

8.00

11.0

7.90

8.00

9.00

7.2

9.00

Leasing approval rate

 %

93

..

76

97

97.3

95

95

98.6

94

94

97.6

96.0

Bankruptcies, SMEs

Per 1 000 firms with employees

7.00

6.60

5.90

4.60

4.30

3.80

3.60

3.40

3.30

3.10

2.84

2.79

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

-5.71

-10.6

-22.0

-6.52

-11.6

-5.26

-5.56

-2.94

-6.06

-8.39

-1.76

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!9. Chile

After 4 years of negative growth in Chile, the year 2018 saw an increase in GDP by 4%, driven mainly by domestic demand (4.7% increase). According to the Central Bank of Chile, growth expectations for 2019 are between 2.75% and 3.5%.

According to the Commission for the Financial Market (CMF), credit activity, measured as the growth of credit placements, grew by 9.35% in 2017-2018. However, the participation of SMEs in outstanding commercial loans decreased in 2018 to 19.9%. Microenterprises and small businesses are responsible for the increase of outstanding SME loans, and Banco Estado has been the key financial institution working to improve access of SMEs to financing, together with the Corporation for the Promotion of Production (CORFO).

According to the bank credit survey of the Central Bank of Chile, credit conditions were more restrictive for SMEs during 2018 and relatively stable throughout the year. This contrasts with large companies, for which credit conditions showed very favourable levels compared to other periods. According to the Central Bank, the demand for credit is weaker, due mostly to large companies. Indeed, SMEs maintained their levels of credit demand. On the other hand, the interest rate differential between large companies and SMEs was reduced from 4.7% in 2017 to 4.5% in 2018, its lowest level since 2013.

According to the data of the fifth Longitudinal Enterprises Survey (ELE), which surveyed more than 339 022 companies between 2016 and 2017, the rejection rates of loans to SMEs decreased significantly from 12.4% in 2015 to 9.4% in 2017. The utilisation rate for SMEs was 89.3%, the second highest rate since 2007. On the other hand, the rate of application for credit by SMEs decreased from 30.4% in 2015 to 26.7% in 2017.

With respect to venture capital funds, Production Development Corporation (CORFO) and Start-Up Chile’s programmes are the main instruments of SME capital financing, although other private and public initiatives have also developed. Venture capital investments increased again in 2018, reaching an investment of more than CLP 39 billion.

A novelty concerning SME financing is the development of the Fintech industry in Chile, which has grown by 34% in 2017 and 29% in the last year. This rapid growth highlights a thriving ecosystem comprised of more than 84 companies that offer a wide range of financial services for SMEs, ranging from payments and remittances to loans and crowdfunding and scoring services. This was taken into account by the Ministry of Finance, which announced in April 2019 the sending to Congress of a Bill that will regulate and strengthen this industry.

Although the average payment delays for SMEs have decreased in recent years, they continue to be high and unfavourable for SMEs, considering one of the main reasons (declared by these companies) for applying for financing is the availability of capital. The Government has made progress in this area through the promulgation of the Law of Payment in 30 Days, which seeks to obtain certainty in the terms and amounts of the invoices, along with the right to compensation in the case of a breach of deadlines. At the beginning of 2020, a report will be issued that will reflect the impact of this practice on the average term of payment for large companies and SMEs.

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Table 9.1. Scoreboard for Chile

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans. SMEs

CLP trillion

6.8

7.6

8.1

9.3

10.1

11.5

11.8

13.7

15.8

17.3

18.7

19.8

Outstanding business loans. total

CLP trillion

40.9

49.9

46.3

48.1

57.2

64.6

69.8

76.4

84.9

88.7

90.3

99.5

Share of SME outstanding loans

% of total outstanding business loans

16.7

15.2

17.5

19.3

17.7

17.9

16.9

18.0

18.6

19.5

20.7

19.9

New business lending. total

CLP trillion

..

..

..

53.3

58.0

58.0

58.1

63.9

67.8

67.4

67.7

71.4

New business lending. SMEs

CLP trillion

..

..

..

2.6

3.1

3.8

3.8

4.4

5.1

5.1

5.6

5.63

Share of new SME lending

% of total new lending

..

..

..

4.9

5.3

6.5

6.6

6.8

7.5

7.6

8.2

7.8

Outstanding Short-term loans. SMEs

CLP trillion

..

..

..

1.6

2.0

2.3

1.8

1.8

1.9

1.8

1.8

1.9

Outstanding Long-term loans. SMEs

CLP trillion

..

..

..

1.0

1.1

1.5

2.0

2.5

3.2

3.3

3.8

3.8

Share of short-term SME lending

% of total SME lending

..

..

..

60.2

63.3

60.3

47.8

41.9

36.9

35.8

32.8

33.3

Government loan guarantees. SMEs

CLP trillion

0.2

0.3

0.8

1.1

1.3

1.9

1.9

1.6

1.7

1.8

1.7

1.6

Government guaranteed loans. SME

CLP trillion

0.3

0.5

1.3

1.8

2.0

2.9

3.1

2.3

2.4

2.6

2.6

2.5

Non-performing loans. total

% of all business loans

2.5

2.2

2.1

2.2

2.4

2.6

2.4

2.1

2.3

2.5

Non-performing loans. SMEs

% of all SME loans

..

..

5.9

6.1

5.5

5.4

6.1

6.1

5.9

5.3

5.2

5.9

Interest rate. SMEs

%

..

..

..

..

..

..

11.8

10.3

9.3

9.3

8.4

8.3

Interest rate. large firms

%

..

..

..

..

..

..

4.7

4.0

3.8

4.0

3.7

3.8

Interest rate spread

% points

..

..

..

..

..

..

7.1

6.3

5.5

5.3

4.7

4.5

Collateral. SMEs

% of SMEs needing collateral to obtain bank lending

44.0

..

49.8

..

..

..

72.8

..

68.1

..

59.9

..

Percentage of SME loan applications

SME loan applications/total number of SMEs

32.9

..

32.4

..

..

..

26.4

..

24.6

..

26.2

..

Rejection rate

1-(SME loans authorized/ requested)

41.4

..

15.0

..

..

..

12.3

..

14.7

..

9.4

..

Utilisation rate

SME loans used/ authorized

86.6

..

91.0

..

..

..

87.9

..

96.7

..

89.3

..

Non-bank finance

Venture and growth capital

CLP billion

26.7

19.3

22.2

27.1

33.9

43.1

30.8

43.2

34.7

40.0

21.9

39.2

Venture and growth capital (growth rate)

%. year-on-year growth rate

..

-27.8

15.3

22.0

25.1

27.0

-28.5

40.1

-19.6

-100

-45.3

79

Leasing and hire purchases

CLP billion

3.0

3.6

3.5

3.8

4.5

5.0

5.6

6.2

6.6

6.7

7.8

8.2

Factoring and invoicing

CLP billion

2.0

2.0

1.4

1.9

2.4

2.6

2.6

2.6

2.8

3.0

3.8

4.4

Other indicators

Payment delays. B2B

Number of days

..

..

..

75.8

74.9

56.7

52.7

55.2

58.0

54.9

56.0

51.8

Bankruptcies. SMEs

Number

122

127

125

136

146

146

164

6

154

295

285

397

Bankruptcies. SMEs (growth rate)

% year-on-year growth rate

..

4.1

-1.6

8.8

7.4

0.0

12.3

-96.3

2 467

91.6

-3.4

39.0

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!10. Colombia

Access to finance is one of the main conditions for strengthening entrepreneurship and growth of SMEs. It allows them to prosper and make investments in order to increase their productivity and competitiveness. It is more difficult for these companies to invest, to modernise their operations, and to innovate or cope with crises when they do not have sufficient access to formal financing.

Since 2006, the National Association of Financial Institutions (ANIF) has been running the Great SME Survey (Anif - Asociación Nacional de Instituciones Financieras, 2019[1]), which gathers the opinion of a sample of SME entrepreneurs from the largest sectors, namely industry, trade and services.

The SME indicator Anif – IPA is constructed with the results of this survey. The indicator constitutes the main thermometer for the economic climate for formal and informal SMES. It compares the evolution of the following variables: economic situation, sales volumes, general performance expectations and sales expectations.

It is estimated that two out of three SMEs are informal in Colombia, according to the study “Demand for Financial Inclusion in Colombia” (Superintendencia Financiera de Colombia, 2015[2]). Having made this clarification, results from the Great SME Survey – GEP, which is conducted on a sample of the business fabric that is considered to be formal, are presented.

According to the results of the last survey round, bank credit has remained the main source of financing for formal SMEs. On average and in the three largest sectors, 40% of SMEs companies requested credit to the financial system. This percentage amounted to 39% in the industrial sector, 41% in the commerce sector and 40% in the services sector. Loan applications remained stable during the last year.

Moreover, 45% of SMEs did not have recourse to alternative sources of financing during the second half of 2018. For the remaining 55%, external providers were the most important source of alternative funding, followed by own resources. Leasing, reinvestment of profits, factoring and the non-banking market did not exceed 8% for any macro sector. In addition, the survey reveals that resources from private equity funds or entrepreneurial support have marginal importance.

During the first half of 2018, resources were allocated by SMEs as follows: working capital (63%), consolidation of liabilities (22%), purchase or leasing of machinery (11%) and remodelling or adjustments (9%).

With a business fabric such as that made up of SMEs in Colombia, it is important to highlight the benefits of access to credit. These include greater growth in sales, greater margins of production and investment in machinery and equipment compared to the companies that do not have access to credit. SMEs that cannot enter the financial system are often forced to resort to informal sources of financing, such as non-bank loans that do not adapt to their needs and have high costs.

The Great SME Survey showed that SMEs are not requesting credit for several reasons. The main reason put forward is that they do not need it; next, SMEs invoke the high costs associated with interest and commissions; and third, they mention the number of procedures for obtaining it, coupled with their distrust in the financial system. SMEs’ lack of recourse to credit is considered a problem of self-exclusion associated with different factors, including the belief that the loan application will be rejected and the ignorance of the importance of financial products for the development of their activity. SMEs often do not perceive financing as a necessity despite the fact that this business segment has a high financial dependence. All these factors are highly correlated with the weak financial education of SMEs.

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Table 10.1. Scoreboard for Colombia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

COP billion

25.61

28.59

26.58

29.12

39.97

46.76

51.6

55.23

58.17

62.09

64.88

68.50

Outstanding business loans, total

COP billion

78.4

94.7

95.9

113.8

134.8

152.8

171.3

197.2

226.3

243.2

251.8

253.6

Share of SME outstanding loans

% of total outstanding business loans

32.67

30.19

27.70

25.58

29.66

30.61

30.11

28.01

25.70

25.53

25.77

27.01

New business lending, total

COP billion

67.7

76.0

77.2

79.0

77.7

95.4

104.0

117.0

117.7

117.3

153.3

160.09

New business lending, SMEs

COP billion

13.2

13.5

15.22

16.91

21.09

23.53

23.57

24.69

25.53

25.3

34.11

35.48

Share of new SME lending

% of total new lending

19.50

17.76

19.71

21.39

27.13

24.67

22.65

21.10

21.70

21.57

22.25

22.05

Outstanding short-term loans, SMEs

COP billion

4.98

7.52

6.14

6.41

10

11.55

12.36

12.93

13.8

13.59

14.44

12.86

Outstanding long-term loans, SMEs

COP billion

20.63

21.07

20.44

22.71

29.97

35.22

39.24

42.3

44.37

48.5

50.44

55.63

Share of short-term SME lending

% of total SME lending

19.45

26.30

23.10

22.01

25.02

24.70

23.95

23.41

23.72

21.89

22.26

18.78

Government loan guarantees, SMEs

COP billion

0.56

1.39

1.82

1.94

5.46

6.19

7.14

7.51

7.72

10.52

11.53

9.40

Government guaranteed loans, SMEs

COP billion

2.23

2.59

2.98

3.16

7.26

9.12

10.81

11.96

12.69

15.37

16.51

15.22

Non-performing loans, total

% of all business loans

0.95

1.27

1.59

1.07

1.00

1.03

1.08

1.33

1.34

1.51

2.36

2.61

Non-performing loans, SMEs

% of all SME loans

2.52

3.66

5.05

3.68

1.76

1.81

1.99

2.45

2.25

3.12

3.71

3.84

Interest rate, SMEs

%

20.09

23.13

20.43

18.66

14.34

14.68

13.24

13.54

14.69

16.87

15.37

18.17

Interest rate, large firms

%

12.53

14.24

10.09

7.23

9.28

9.25

7.98

8.33

8.78

11.00

9.16

13.57

Interest rate spread

% points

7.56

8.89

10.34

11.43

5.06

5.43

5.26

5.21

5.91

5.86

6.21

4.60

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

79.25

87.54

86.28

87.31

90.04

90.12

90.02

89.30

91.04

91.71

92.15

91.75

Percentage of SME loan applications

SME loan applications/ total number of SMEs

49

53

44.6

49.6

47

44

43.3

39.6

42.6

34

40

40

Rejection rate

1-(SME loans authorised/ requested)

2

4

9

5

3

4

7

3

7.5

4

8

7

Utilisation rate

SME loans used/ authorised

98

96

91

95

97

96

93

97

92.5

96

92

93

Non-bank finance

Venture and growth capital

COP billion

..

..

..

..

..

..

..

..

1.83

2.91

4.23

5.61

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

..

..

..

59 .3

45 .5

32.69

Leasing and hire purchases

COP billion

..

..

..

..

..

..

..

..

33.34

39.45

41.98

50.17

Factoring and invoice discounting

COP billion

5.77

6.04

7.15

7.01

12.85

10.55

17.56

23.75

31.47

25.77

25.53

26.58

Other indicators

Payment delays, B2B

Number of days

49

50

61

62

59

55

56

65

66

85

95

101

Bankruptcies, SMEs

Number

33

95

149

159

178

116

156

141

164

200

246

198

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

187.9

56.84

6.71

11.95

-34.8

34.48

-9.62

16.31

21.95

23.00

-19.51

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!11. Czech Republic

In 2018, there were roughly 1.155 million active enterprises in the Czech Republic. 99.83% of these firms were SMEs with less than 250 employees each. Together, they employed almost 1.88 million people, or 57.68% of the Czech Republic’s workforce. Micro-firms dominated the business landscape, comprising 96.4% of all SMEs in 2018 (roughly stable from 2017).

SME interest rates increased by 25.6 % in 2018 vis-à-vis 2017. It is the first year of increasing after the period 2008-17, when SME interest rates continued dropping year-on-year (by 55.1% in total). The recent development 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 0.50 to 0.75 percentage points in 2018.

Venture capital investments peaked in 2008, and then declined dramatically to 2017. This trend changed in 2018, with VC investments amounting to EUR13.9 million, 33.6% of their 2008 value. Growth capital fell even more steeply, from EUR 191.9 million in 2009, to EUR 4.9 million in 2016. In 2018, it dropped to 3.5 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.

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Table 11.1. Scoreboard for the Czech Republic

Indicator

Unit

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

CZK billion

555.03

527.55

550.08

587.91

589.68

610.79

621.39

652.59

702.81

725.63

762.99

Outstanding business loans, total

CZK billion

850.76

784.07

783.54

831.21

840.59

871.58

890.23

935.36

994.86

1036.1

1097.39

Share of SME outstanding loans

% of total outstanding business loans

65.24

67.28

70.20

70.73

70.15

70.08

69.80

69.77

70.64

70.03

69.53

New business lending, total

CZK billion

866.11

780.87

667.98

599.09

694.94

500.50

544.73

607.59

510.58

457.94

461.84

New business lending, SMEs

CZK billion

207.24

147.74

123.40

124.12

129.83

86.66

97.76

118.28

100.46

101.24

97.92

Share of new SME lending

% of total new lending

23.93

18.92

18.47

20.72

18.68

17.31

17.95

19.46

19.68

22.11

21.20

Outstanding short-term loans, SMEs

CZK million

..

..

73 626

72 433

77 853

45 531

40 360

41 742

36 974

33 918

29 835

Outstanding long-term loans, SMEs

CZK million

..

..

49 772

51 684

51 977

41 129

57 404

76 475

63 490

67 325

68 090

Share of short-term SME lending

% of total SME lending

..

..

59.67

58.36

59.97

52.54

41.28

35.31

36.80

33.50

30.47

Government loan guarantees, SMEs

CZK million

3 529

6 369

6 593

472

1 534

3 251

4 010

6 913

3 530

4 014

6 485

Government guaranteed loans, SMEs

CZK million

5 094

9 550

10 070

630

2 215

4 616

5 771

9 947

5 055

5 758

9 287

Direct government loans, SMEs

CZK million

286

209

629

1 090

782

101

86

65

7

291

1 440

Non-performing loans, total

CZK million

35 340

61 904

70 166

67 876

61 480

62 032

58 694

52 677

50 307

43 225

39 999 (P)

Interest rate, SMEs

%

5.57

4.64

4.01

3.73

3.48

3.13

3.76

2.70

2.50

2.50

3.14

Interest rate, large firms

%

4.84

3.46

3.34

2.63

2.43

1.89

2.00

1.80

1.80

1.90

2.62

Interest rate spread

% points

0.73

1.18

0.67

1.10

1.05

1.24

1.76

0.90

0.70

0.60

0.52

Non-bank finance

Venture and growth capital

EUR million

104.0

219.7

153.8

18.3

9.5

23.3

34.6

12.4

9.4

16.3

17.4

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

111.2

-30.0

-88.1

-48.1

145.4

48.3

-64.0

-24.6

73.9

6.7

Other indicators

Payment delays, B2B

Number of days

18.00

19.00

14.00

14.00

15.00

14.00

14.00

14.00

19.00

16.00

15.00

Bankruptcies, SMEs

Number

873

1 280

1 301

1263

1345

1379

1228

1001

904

769

649

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

46.62

1.64

-2.92

6.49

2.53

-10.95

-18.49

-9.69

-14.93

-15.60

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!12. Denmark

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

The share of new business lending directed towards SMEs has decreased since 2015 and stood at 8.6% in 2018, which is low by international standards. However, this is mainly the result of an increase in loans to large businesses, as new lending to SMEs remained stable between 2016 and 2018.

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 poor. Between December 2017 and December 2018, the share of SMEs describing their financial conditions as poor decreased from 17.2% to 16.3%. For new small enterprises, the demand for loans increased and credit standards were relaxed between the first quarter of 2015 and the third quarter of 2018. However, in the last quarter of 2018 and the first quarter of 2019, demand has decreased and credit standards have tightened.

SME interest rates have decreased from an average of 6.6% in 2008, to 2.3% in 2018. 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 2018.

Due to an increase in the venture capital investments of Danish private equity firms, total venture and growth capital investments increased by 29% between 2017 and 2018, reaching their highest level to date. This is the net effect of a sharp increase in venture capital investments in the later stages but a decrease in growth capital investments compared to 2017.

Average payment delays remained at an all-time low of 2 days in 2018, after a decline from 4 to 2 days in 2017, continuing their downward trend since 2012.

Vækstfonden (The Danish Growth Fund) is a government backed investment fund 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.

The amount of government loan guarantees and government-guaranteed loans developed in opposite directions between 2012 and 2017. The issuance of government loan guarantees in most years decreased while a continuously higher proportion was accounted for by government-guaranteed loans. However, the trend reversed between 2017 and 2018. Government loan guarantees issued to SMEs increased from a total loan amount of DKK 514 million in 2017 to DKK 529 million in 2018, while the amount of government guaranteed loans on the other hand decreased from DKK 1 377 million in 2017 to DKK 1 225 million 2018.

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Table 12.1. Scoreboard of Denmark

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, total

DKK billion

732

809

814

812

809

830

860

914

940

989

1 033

1 080

New business lending, total

DKK billion

332

385

318

313

292

241

303

474

519

508

521

568

New business lending, SMEs

DKK billion

41

35

28

35

34

39

37

55

73

51

52

49

Share of new SME lending

% of total new lending

12.29

9.15

8.96

11.21

11.70

16.25

12.07

11.51

14.10

10.12

10.08

8.62

New short-term loans, SMEs

DKK billion

26

26

22

23

24

20

22

34

35

31

29

27

New long-term loans, SMEs

DKK billion

14

9

6

23

10

19

15

21

38

21

23

22

Share of short-term SME lending

% of total SME lending

64.70

74.57

78.79

50.00

70.53

51.49

60.25

62.38

48.48

60.00

55.63

55.09

Government loan guarantees, SMEs

DKK million

210

178

209

769

1 192

1 222

783

658

668

620

514

529

Government guaranteed loans, SMEs

DKK million

..

..

..

..

17

61

286

746

1 076

1 257

1 377

1 225

Interest rate, SMEs

%

5.97

6.59

5.33

4.39

4.38

3.91

3.78

3.44

2.99

2.74

2.36

2.27

Interest rate, large firms

%

5.23

5.68

3.63

2.49

2.40

2.14

1.73

1.65

1.53

1.34

1.23

0.98

Interest rate spread

% points

0.75

0.91

1.70

1.90

1.97

1.77

2.04

1.79

1.45

1.40

1.12

1.29

Non-bank finance

Venture and growth capital

DKK million

263

205

159

280

186

270

241

230

339

554

532

684

Venture and growth capital (growth rate)

%. Year-on-year growth rate

..

-22.34

-22.45

76.57

-33.49

45.13

-10.81

-4.73

47.66

63.33

-4.03

28.65

Other indicators

Payment delays, B2B

Number of days

7.2

6.1

12.0

12.0

13.0

12.0

10.0

9.0

4.0

4.0

2.0

2.0

Bankruptcies, SMEs

Number

..

..

2 563

2 583

1 938

1 958

1 698

1 328

1 584

1 853

1 888

2 013

Bankruptcies, SMEs (growth rate)

%. Year-on-year growth rate

..

..

..

0.78

-24.97

1.03

-13.28

-21.79

19.28

16.98

1.89

6.62

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!13. Estonia

In 2017, Estonian SMEs employed 79% of the workforce and accounted for 79.2% of total value added. 91.6% of all firms were micro-enterprises, i.e. firms with less than 10 employees, employing 34% of the workforce and accounting for 29.9% of total value added in 2017.

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 2018, 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 the low demand for loans. Loans under EUR 1 million, which are used as a proxy to describe SME loans, may have become unreliable to depict SME activities. This is because the high inflation rates in recent years may have pushed SMEs to contract larger 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. After that, interest rates started to increase again reaching 3.28% in 2018. For larger loans, the interest rate has risen for the last three years in a row to 2.12%.

Venture and growth capital has been growing steadily on recent years. Estonia has a well-developed start-up community that has good potential for raising venture capital. The year of 2018 was a record year, with companies raising EUR 329 million, a 21% year-on-year growth.

Leasing and hire purchases turnover declined sharply between 2008 and 2009, and only recovered somewhat in 2011. After that, recovery was stronger and total turnover grew by 13% in 2018. Factoring was also much more important in 2018 than in previous years, reaching EUR 3 billion. This is close to EUR 700 million more than the year before.

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, non-performing loans amounted to a 1.99% share of total SME loans (slightly higher than the previous year), while SME bankruptcies decreased by 20% year-on-year. The share of non-performing loans in total loans decreased strongly to 0.81%, with SME NPLs slightly increasing from 1.94% to 1.99% in 2018.

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 2018, government loan guarantees to SMEs increased by 18.5%, and so did total guaranteed loans. Higher economic activity also improves demand for guarantees.

KredEx, a state owned financing institution, remains an investor in several fund- of-funds. The Baltic Innovation Fund, which has been running since 2012, in the EstFund, since 2016, offering private and venture capital. KredEx also provides the management of the fund-of-funds Early Fund II via the subsidiary AS SmartCap. With the support of these funds, a total of nearly EUR 700 million is being invested in the rapidly developing companies of the region.

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Table 13.1. Scoreboard for Estonia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

EUR billion

2.44

2.49

2.13

1.90

1.68

1.61

1.65

1.70

1.67

1.71

1.81

1.70

Outstanding business loans, total

EUR billion

6.80

7.20

6.86

6.46

5.95

6.15

6.25

6.44

6.80

7.34

6.93

7.17

Share of SME outstanding loans

% of total outstanding business loans

35.83

34.55

31.01

29.37

28.28

26.24

26.45

26.40

24.56

23.23

26.1

23.7

New business lending, total

EUR billion

8.55

7.31

4.46

4.26

5.06

5.61

6.17

6.41

6.68

6.99

7.19

7.92

New business lending, SMEs

EUR billion

3.60

3.52

2.13

1.87

1.96

2.12

2.37

2.46

2.25

2.37

2.55

2.63

Share of new SME lending

% of total new lending

42.09

48.21

47.70

43.82

38.63

37.80

38.43

38.42

33.73

33.84

35.5

33.26

Short-term loans, SMEs

EUR million

480.53

475.13

377.13

317.84

325.92

302.35

317.41

333.41

300.81

314.86

320.18

299

Long-term loans, SMEs

EUR billion

1.96

2.01

1.75

1.58

1.36

1.31

1.34

1.37

1.37

1.39

1.49

1.40

Share of short-term SME lending

% of total SME lending

19.73

19.09

17.74

16.76

19.39

18.74

19.20

19.62

18.00

18.46

17.7

17.63

Government loan guarantees, SMEs

EUR million

15

23

52

66

53

60

52

66

66

93

61

72

Government guaranteed loans, SMEs

EUR million

27

39

86

122

116

122

100

111

112

171

100

118

Non-performing loans, total

% of all business loans

0.61

3.71

8.76

8.53

5.91

3.79

2.01

1.97

1.56

1.62

1.35

0.81

Non-performing loans, SMEs

% of all SME loans

0.95

3.59

7.36

8.17

6.31

5.18

3.27

2.96

2.79

2.88

1.94

1.99

Interest rate, SMEs

%

6.11

6.71

5.34

5.06

4.92

4.02

3.41

3.36

3.04

2.96

2.99

3.28

Interest rate, large firms

%

5.68

6.13

4.21

3.90

3.76

3.05

2.86

2.68

2.05

2.08

2.12

2.13

Interest rate spread

% points

0.43

0.58

1.14

1.16

1.16

0.98

0.56

0.68

0.99

0.88

0.87

1.15

Non-bank finance

Venture and growth capital

EUR million

..

4.74

4.51

17.8

5.53

16.6

10.9

68.7

96. 6

105.7

272.6

329

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

- 5.00

293.72

- 68.84

200.24

- 34.34

530

40.6

9.4

157.9

20.7

Leasing and hire purchases

EUR million

891.17

709.63

222.77

281.29

519.37

649.60

545.75

537.16

543

676

718

811

Factoring and invoicing

EUR billion

1.29

1.41

0.99

0.91

1.13

1.92

1.98

2.09

2.239

2.09

2.29

3 034

Other indicators

Payment delays, B2B

Number of days

9

8.1

12.7

12.8

10.2

10.1

9.4

7

6.9

6

5.5

..

Bankruptcies, SMEs

Number

202

423

1055

1028

623

495

459

428

376

335

343

273

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

109.41

149.41

- 2.56

- 39.40

- 20.55

- 7.27

- 6.75

- 12.15

- 10.90

2.39

-20.41

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!14. Finland

The Finnish economy continued to grow in 2018. The uncertainty in the global economy, however, slowed down exports and corporate investments. Low interest rates supported investments and the availability of SME financing.

In Finland, 99.3% of all employer firms were SMEs in 2017 (84 043 SMEs), employing 66.6% of the labour force. The vast majority of them (76.5%) were micro-enterprises with less than 10 employees. The decline in the number of employer firms levelled off in 2017 after a few years of downswing, whereas the number of self-employed has been increasing.

The volume of new lending to SMEs continued to increase in 2018, almost approaching the pre-crisis level. New business lending to SMEs grew by 5.5% in 2018 in comparison to the previous year. Meanwhile, total new lending to all enterprises declined by 2.2%. SMEs’ strong demand for loans was supported by the bright economic situation and positive expectations regarding economic growth in Finland in 2018.

The base rate on small loans of up to EUR 1 million, which is used as an interest rate proxy for loans to SME, remained quite stable during 2010–2017, with the average interest rate at around 2.8%. In 2018, the interest rate on small loans increased to 3.9%. On the other hand, the interest rate charged on loans over EUR 1 million has remained at around 1.3% for three consecutive years. The widening of credit spread between small and large business loans indicates a tightening of credit terms for SMEs compared to large enterprises.

A record-high figure of EUR 479 million was invested into start-ups and early stage growth companies in Finland in 2018. Of the total sum, foreign investments accounted for EUR 291 million. Finnish Venture Capital (VC) funds invested EUR 101 million and business angels invested EUR 36 million. Foreign VC funds allocated EUR 103 million of direct investments into Finnish companies. The amounts of investments from both Finnish and foreign VC funds has grown significantly from the previous year.

Ample availability of bank financing lowered the demand for public sector financing from Finnvera. Finnvera is a financing company owned by the government of Finland and the country’s official export credit agency. The volume of direct government loans to SMEs has decreased yearly since 2015 from EUR 385 million to EUR 203 million. Moreover, the introduction of EU guarantee programmes targeted at SMEs has increased availability of SME loans intermediated by banks and reduced the demand for loans provided by Finnvera.

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Table 14.1. Scoreboard for Finland

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, total

EUR billion

48.4

57.6

54.1

56.5

60.4

63.3

66.7

68.4

72.5

76.0

78.1

85.3

New business lending, total

EUR billion

42.7

54.4

50.9

54.4

37.4

34.9

39.5

35.6

35.0

36.4

37.1

36.3

New business lending, SMEs

EUR billion

11.6

11.9

9.9

8.3

7.9

7.7

7.3

6.8

8.4

9.1

9.6

10.1

Share of new SME lending

% of total new lending

27.11

21.85

19.56

15.25

21.11

22.23

18.55

19.21

24.14

24.92

25.90

29.95

Short-term loans, SMEs

EUR million

..

..

..

839

1 615

1 613

1 312

1 250

1 655

1 864

2 046

2 384

Long-term loans, SMEs

EUR million

..

..

..

3 314

6 287

6 136

6 018

5 583

6 789

7 219

7 561

7 747

Share of short-term SME lending

% of total SME lending

..

..

..

20.20

20.44

20.82

17.90

18.29

19.60

20.52

21.30

23.53

Government loan guarantees, SMEs

EUR million

416

438

474

447

497

408

379

476

522

570

540

563

Direct government loans, SMEs

EUR million

385

468

593

397

369

342

284

287

385

275

241

203

Non-performing loans, total

% of all business loans

..

..

..

..

..

..

..

..

4.07

3.07

2.68

3.72

Non-performing loans, total (amount)

EUR million

..

..

..

..

..

..

..

..

1 423

1 119

994

3 170

Interest rate, SMEs

%

5.39

5.58

3.02

2.66

3.23

2.86

2.81

2.94

2.96

2.76

2.75

3.92

Interest rate, large firms

%

4.83

5.08

2.24

1.86

2.59

2.07

1.91

1.92

1.46

1.33

1.35

1.34

Interest rate spread

% points

0.56

0.50

0.78

0.80

0.64

0.79

0.90

1.02

1.50

1.43

1.40

2.58

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

33

34

35

41

41

38

35

34

31

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

13.85

18.42

20.79

21.50

21.85

27.70

21.97

23.89

19.99

20.35

Rejection rate

1-(SME loans authorised/ requested)

..

..

6.98

4.92

3.12

8.08

7.06

6.71

6.24

5.59

6.76

4.15

Non-bank finance

Venture and growth capital

EUR million

144

191

119

319

120

149

133

134

175

203

207

315

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

32.6

-37.7

168.1

-62.4

25.0

-10.7

1.0

30.6

16.0

2.0

52.2

Leasing and hire purchases

EUR million

..

..

1 067

1 361

1 566

1 765

1 658

1 858

..

..

..

..

Other indicators

Payment delays, B2B

Number of days

6

5

7

7

7

7

6

6

5

5

5

5

Bankruptcies, SMEs

Number

2 254

2 612

3 275

2 864

2 947

2 961

3 131

2 986

2 574

2 408

2 160

2 534

Bankruptcies, SMEs (growth rate)

%, year-on-year growth rate

..

15.9

25.4

-12.5

2.9

0.5

5.7

-4.6

-13.8

-6.4

-10.3

17.3

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!15. France

France has approximately 4 million small and medium enterprises (SMEs). They account for 99.9% of all enterprises.

Outstanding SME loans increased by more than 4.3% between 2017 and 2018, reaching EUR 254 135 million in 2018. After having decreased between 2014 and 2017, the spread between interest rates charged to SMEs and to large firms increased in 2018, reaching 0.45 percentage points. Furthermore, SMEs’ access to bank lending remains high: 88% of SMEs' requests for cash credits were fully or almost fully granted as of Q4 2018.

Private equity investments in French firms have continued to increase in 2018 to EUR 14.7 billion, up 2.8% compared to 2017. The average yearly growth rate over 2013-2018 is around 16.4%.

Factoring volumes have continuously increased in France since 2009.

Payment delays reached 13.3 days in 2015, the highest since the crisis, and have been steadily decreasing since 2015 to just under 11 days in 2018.

For the third year since recovery, the number of SME bankruptcies has remained under 60 000, staying stable over 2017-2018 at around 54 000.

In terms of government policies responding to the financing constraints faced by SMEs, in 2018, credit mediation continued to assist French enterprises via an online platform. In line with the trend from 2017, the number of requests has continued to decrease 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 share of mediation applications that are accepted stabilised at around 66% in 2018.

The Government is also involved in reducing business-to-business payment delays. The transparency, anti-corruption and economic modernisation law enacted in December 2016 strengthened the legislative framework to fight against business-to-business payment delays. The maximum fine for firms that do not respect legal payment delays was raised to two million. Moreover, a “name and shame" procedure was introduced. Henceforth, there is a systematic advertising of decisions on fines on the website of the Ministry of Economy and Finance. As a result, three firms were required to pay record fines of more than EUR 500 000 in 2018. It remains the case that the largest firms are responsible for the largest payment delays. While the longest delays (superior to 30 days) have decreased in number since 2017, the share of firms with timely payments has decreased from 44% to 41.8%.

Better access to financing for very small firms has also been the focus of public policy. 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 and diversified in certain regions. 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.

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Table 15.1. Scoreboard for France

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

EUR Billion

180.5

189.1

189.6

199.7

210.3

214.0

216.5

219.2

224.2

232.8

243.7

254.1

Outstanding business loans, total

EUR Billion

868.5

927.1

938.4

974.0

1012.2

1009.6

1025.9

1036.0

1078.2

1130.0

1193.7

1257.2

Share of SME outstanding loans

% of total outstanding business loans

20.78

20.40

20.21

20.50

20.77

21.20

21.11

21.16

20.80

20.60

20.41

20.21

New business lending, total

EUR Billion

86.4

67.6

-9.5

9.1

34.6

7.8

1.6

18.9

35.0

43.8

56.1

58.7

Outstanding short-term loans, SMEs

EUR Billion

43.1

42.7

37.5

38.1

40.3

41.1

42.8

43.3

43.5

43.9

44.7

44.9

Outstanding long-term loans, SMEs

EUR Billion

115.2

123.3

127.8

134.4

142.6

146.5

146.3

148.6

151.9

158.6

166.7

175.8

Share of short-term SME lending

% of total SME lending

27.20

25.70

22.70

22.09

22.05

21.91

22.65

22.55

22.27

21.66

21.15

20.33

Government loan guarantees, SMEs

EUR Billion

5.9

6.9

11.3

11.9

9.8

8.5

8.9

7.8

8.0

8.4

8.9

8.7

Government guaranteed loans, SMEs

EUR Billion

2.7

3.2

5.8

5.3

4.2

4.2

4.4

4.8

5.0

5.2

5.1

3.7

Non-performing loans, total

% of all business loans

3.70

3.66

4.71

4.56

3.96

4.06

4.25

4.14

4.05

3.90

3.62

3.28

Interest rate, SMEs

%

5.10

5.42

2.86

2.48

3.11

2.43

2.16

2.08

1.78

1.50

1.40

1.48

Interest rate, large firms

%

4.52

4.76

1.96

1.57

2.23

1.72

1.46

1.30

1.19

1.14

1.10

1.03

Interest rate spread

% points

0.58

0.66

0.90

0.91

0.89

0.71

0.70

0.78

0.59

0.35

0.30

0.45

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

9.42

8.52

7.28

6.33

5.17

4.34

4.22

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

..

..

..

38.42

35.64

35.73

37.88

37.90

37.17

36.72

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

..

11.12

8.00

6.61

7.55

6.21

5.14

4.36

Utilisation rate

SME loans used/ authorised

87.69

87.77

87.17

86.37

87.03

87.64

87.32

87.49

87.17

86.98

86.76

86.85

Non-bank finance

Venture and growth capital

EUR Billion

2.0

2.4

2.4

2.9

3.5

2.4

2.5

3.2

4.6

4.7

4.4

5.1

Venture and growth capital (growth rate)

%, Year-on-year growth rate

24.73

21.34

-1.08

22.22

21.34

-32.46

3.35

30.98

42.55

2.54

-7.38

15.87

Leasing and hire purchases

EUR Billion

9.3

9.5

9.0

8.5

8.1

6.6

6.1

5.7

7.1

7.7

7.8

8.1

Factoring and invoice discounting

EUR Billion

21.2

22.5

18.8

20.7

22.5

22.6

24.8

25.6

28.0

31.0

36.1

37.6

Other indicators

Payment delays, B2B

Number of days

12.18

11.90

11.80

11.98

12.18

11.83

12.08

12.21

13.28

11.90

11.12

10.79

Bankruptcies, SMEs

Number (thousands)

51.3

55.5

63.2

60.3

59.4

61.1

62.5

62.4

63.0

58.0

54.4

54.0

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

8.23

13.75

-4.53

-1.39

2.71

2.37

-0.22

0.99

-7.90

-6.14

-0.81

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!16. Georgia

In 2016, pursuant to the National Strategy of SME Development, the Georgian National Statistics office introduced a new methodology and new definitions to gather statistics on the country’s SMEs. According to the new methodology, as of 2018, 99.70% of active enterprises in Georgia are SMEs. In total, SMEs account for 63.3% of total private employment and contribute to 53.0% of total business sector turnover and 59.1% (GEL 24.1 million) of value of all production in the business sector (GEL 40.9 million).

In line with the recent economic expansion, credit to SMEs rose significantly year over year, amounting to a staggering 242.1% increase from GEL 938 million in 2010 to GEL 3 211 million in 2018. Throughout this period, total business loans grew more than 176%, and the proportion of SME loans as a percentage of total business loans grew from 36.4% to 45.1%, the highest point over the period.

The average interest rate charged to SMEs in Georgia is high by OECD standards, but has significantly declined over the decade, from 16.5% in 2010 to 12.3% in 2018. However, the interest rate charged to SMEs has been increasing over the last two years, from 9.7% in 2016, to 10.36% in 2017, and finally to 12.3% this year. As a result, the interest rate spread between large enterprises and SMEs grew to 3%, from 1.06% in 2017.

Although precise 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 still play a very marginal role. However, the rapid growth of micro-financing organisations should not be neglected.

According to the World Bank Group's Doing Business indicator, Georgia improved its “ease of doing business” rank to 9th in 2018, and to 6th in 2019. The Ease of Doing Business 2019 report shows that by allowing voluntary value added tax registration at the time of business registration, Georgia reduced its relative gap to the best regulatory performance the most in 2017/18. Previously, entrepreneurs had to make a separate visit to the Revenue Service for value added tax registration after company registration. Georgia also enhanced its existing one-stop shop for business incorporation, allowing entrepreneurs to start a company through a single procedure. Currently, the country has the lowest number of procedures required to start a business and to register a property. In addition to the business registration procedures, Georgia simplified the tax system, and the enforcement of contracts. Paying taxes was made easier by levying income tax on distributed profits rather than on taxable profits.

Georgia facilitated the enforcement of contracts by introducing random and automatic assignment of cases to judges across courts. Most notably, the country improved its insolvency framework 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. According to the information from the Public Registry Agency, after a 28% growth in the number of liquidation procedures in 2017, the indicator saw a 47.78% decrease in 2018, reaching 153 cases total.

In 2018, the overall volume of non-performing SME loans exceeded GEL 407 million, the highest level since 2010, and the share of non-performing SMEs loans is now at 6.1%. The lowest level was reached in 2014 when the share of non-performing SMEs loans was 4.2%. Over the past year, the volume of non-performing SME loans increased by 84%, amounting to a 1.8% increase in the share of all SME loans.

Georgia ranks 48th among the 129 economies featured in the Global Innovation Index 2019. Georgia ranks 3rd among the 26 lower middle-income economies and 4th among the 19 economies in Northern Africa and Western Asia. Between 2018 and 2019, the rank increase for Georgia is a mix of improved performance and new availability of innovation-related data. Its most notable gains this year include indicators such as Patent families in two or more offices, High-technology imports, Exports of Information and communication (ICT) services, and Industrial designs by origin.

Government of Georgia has prioritised SME development as the main source of private sector growth, jobs creation and innovation. Among the successful reforms Georgian Government has conducted are the Innovation and Entrepreneurship Policy. Through the budgetary support, in 2014, the Ministry of Economy and Sustainable Development of Georgia established two sister agencies, Georgia’s Innovation and Technology Agency (GITA) and Enterprise Georgia, with the main aim of promoting SME development and strengthening SME competitiveness. Both agencies provide financial support to SMEs, as well as a broader range of services that includes access to special infrastructure, 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-sized enterprises at different stages of development.

The Global Competitiveness Report 2018 ranks Georgia at 66th place out of 140 economies. Venture capital availability, lack of workforce diversity and low quality of vocational training remain as problematic factors for the Georgian economy. Despite the low global ranking, Georgia tops Eastern Partnership countries in terms of SME access to finance according to the 2016 SME Policy Development Index Dimensions, and is increasing government efforts in this regard. Government initiatives have thus far focused on decreasing entry barriers to SMEs by simplifying business registration, reducing taxes for small businesses and introducing robust regulatory initiatives.

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Table 16.1. Scoreboard for Georgia

Indicators

Units

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Business loans, SME

GEL million

..

1 400

1 548

1 738

2 051

2 422

3 621

3 992

5 176

6 620

Business loans, total

GEL million

3 097

3 843

4 501

4 989

5 663

6 715

8 433

10 500

12 000

14 687

Business loans, SMEs

% of total business loans

..

36.4

34.4

34.8

36.2

36.1

42.9

38.0

43.1

45.1

Non-Performing Loans, total

GEL million

926

784

667

810

791

988

1 200

1 380

1 337

1 480

Non-performing loans, SMEs

GEL million

..

144

134

111

102

101

161

206

221

407

Non-performing loans, total

% of all business loans

..

16.1

11.5

12.2

10.7

10.6

9.8

10.1

7.7

6.6

Non-performing loans, SMEs

% of total SME loans

..

10.3

8.7

6.4

5

4.2

4.4

5.2

4.3

6.1

Interest rate, SME

%

..

16.50

15.50

14.50

11.60

10.70

12.70

9.70

10.36

12.3

Interest rate, large firms

%

..

13.60

14.10

12.80

11.20

10.00

11.40

9.90

9.30

9.3

Interest rate spread

..

2.90

1.40

1.70

0.40

0.70

1.30

-0.20

1.06

3.0

Collateral, SMEs

%

..

..

..

..

95.6

..

..

..

..

..

Rejection rate

%

..

..

..

..

4.6

..

..

..

..

..

Utilization rate

%

..

..

..

..

95.4

..

..

..

..

..

Procedures of enterprises' liquidation (incl. bankruptcy)

Number

52

2 094

3 176

2 524

1 775

1 785

1 560

229

293

153

Procedures of enterprises' liquidation (incl. bankruptcy)

Year-on-year growth rate (%)

-14.75

3 926.92

51.67

-20.53

-29.68

0.56

-12.61

-85.3

28

-47.78

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!17. Germany

Policy developments

In general, SMEs’ access to finance is currently very good in Germany. The continued period of low interest rates has led to favourable conditions for bank finance, which is still the most important source of financing for German SMEs. Thus, the majority of SMEs report no or few difficulties to finance their investments through bank loans. However, where the market supply is not sufficient, the Federal Government provides a wide range of financial instruments to support SMEs, potential entrepreneurs and innovative start-ups so that they can implement new projects, products, processes and services.

A key area of support is broad-based support for start-up and growth projects. The focus in recent years has been on the politically important area of financing innovation and supporting venture capital for start-ups, which has greatly expanded over the last legislative period.

As a result, the German venture capital market has considerably developed over the last years. Thanks to numerous public funding programmes at the federal and the state level, Germany’s VC market has observed a very positive development, especially in the early-stage financing of start-ups. In international comparison, however, the German VC market is still relatively small. Particularly in the second and third growth phase (with financing volumes of EUR 50 to 150 million), German start-ups often face a lack of financing opportunities. One reasons for this is that there are still relatively few venture capital funds in Germany that invest in the growth phase. However, an increasing number of funds are emerging with a volume of EUR 500 million or more, which allows for larger financing rounds.

Programmes

Credit-based financing for start-ups

The ERP Special Fund provides for a differentiated and well-established system of promotional loan instruments for different start-up phases. The loan programmes [ERP-Gründerkredit Startgeld] # ERP Start-Up Loan - Start-Up Money, [Gründerkredit Universell] # ERP Start-Up Loan - Universal and [ERP-Kapital für Gründung] # ERP Capital for Start-Ups provide low-interest loans with a long maturity for start-ups as well as business succession. In some of these programmes, banks providing the financing are relieved from a portion of the credit default risk. ERP-Capital for Start-Ups provides subordinated loans with favourable interest rates in order to strengthen the company's equity base and thereby to facilitate further external financing.

ERP-Innovationsfinanzierung # ERP innovation financing

ERP Innovation financing was restructured as of 1 July 2017 with the aim to promote the digital transformation of SMEs by providing an expanded range of innovation financing, with an explicit focus on digitisation projects.

The ERP Digitisation and Innovation Loan serves to finance digitisation and innovation projects as well as investments and working capital for innovative companies. Funding goes to established commercial companies and to professional service providers. The programme has been refined further over the last year and is now also available to business starters and young companies. The funding takes the form of a low-interest loan of up to EUR 25 million per project and up to EUR 7.5 million per financing need of innovative companies. Funding is provided both for investments and for working capital. The bank processing the application can be relieved of up to 70% of its liability.

High-Tech Gründerfonds (HTGF) # High-tech Start-up Fund

The High-tech Start-Up Fund (HTGF) is an early-phase funding programme for highly innovative and technology-oriented companies whose operative business activities started less than three years ago. To be eligible for financing, projects must have shown promising research findings, be based on innovative technology, and the market situation for the product must be bright. In addition to providing capital, the fund ensures that the management of young start-ups receives the necessary help and support. An initial funding amount of up to EUR 1 000 000 is provided, with a total of up to EUR 3 million usually being available per company. In the first phase of the fund (up to November 2011), a total of EUR 272 million was available. The follow-up fund (HTGF II) provides total funding of EUR 304 million. A third fund, HTGF III, was launched in autumn 2017. In addition to the support from the Economic Affairs Ministry and the German Promotional Bank (KfW), more than 30% of the EUR 319.5 million fund has been provided by 33 private investors – either well-established SMEs or large corporations.

Mikromezzaninfonds # Micro-Mezzanine Fund

The Micro-Mezzanine Fund was launched in 2013 and provides dormant equity of up to EUR 50 000 for small companies and business starters and of up to EUR 150 000 for companies within the special target group. The fund’s special target group are companies that provide training, are operated by women or people with a migrant background, or were founded by persons who were formerly unemployed. Social enterprises operating commercially are also eligible to apply for financing on the terms of the special target group, as are companies with a focus on environmentally-compatible production. Both the European Social Fund (ESF) and the European Recovery Programme (ERP) finance the fund. The volume of the first fund was EUR 74.5 million. The current fund (MMF II) has a volume of EUR 153.2 million.

KfW Capital (German Promotional Bank Capital)

On the basis of a decision by the Bundestag, the Ministry for Economic Affairs, the Ministry of Finance and the KfW have drafted an overall concept for an organisationally independent, growth-oriented venture capital company; it started operations as “KfW Capital” in October 2018. KfW plans to double the annual amount of funding provided by KfW Capital to EUR 200 million by 2020. This initially takes place primarily via investments in venture capital funds, particularly as part of the ERP-VC Fund Investments programme, which has been in place since 2015. In addition, KfW Capital is a partner in the High-tech Start-up Fund and coparion. Finally, KfW Capital aims to improve the quality of the venture capital funding. The aim is to develop a product structure in which the individual financing phases are coordinated throughout the entire company lifecycle. In total, the expansion should result in funding commitments of around EUR 2 billion in the next ten years or so.

Venture Tech Growth Financing

At the end of 2018, the KfW programme Venture Tech Growth Financing commenced operations. As part of this programme, the German Promotional Bank (KfW) can issue EUR 50 million of venture capital loans to innovative fast-growing tech companies each year. Over the entire funding period, EUR 500 million in funding will be made available together with private-sector investors to start-ups in the growth phase.  

INVEST–Zuschuss für Wagniskapital # INVEST – Grant for Venture Capital

INVEST is a grant programme run by the Federal Ministry for Economic Affairs and Energy. It has been set up in 2013 and was further developed in 2017 to support private investors who want to acquire a stake in young and innovative companies. Under this programme, business angels that invest in innovative start-ups receive an acquisition grant worth 20% of the sum invested. In addition, natural persons can receive an exit grant if they sell their shares. The amount provided is equivalent to 25% of the capital gains from the sale and thus more or less covers the tax imposed on the profit from the sale. The shares must be held for a minimum of three years. Both grants are tax-free for the investor. Funding can be provided for a maximum of EUR 500 000 of investment per investor and per year. The maximum amount eligible for funding that can be invested in a single company per year is EUR 3 million.

copy the linklink copied!18. Greece

99.9% (almost 100%) 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. The same trend further continued in 2018. 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) has had relatively little impact on Greek SMEs. The interest rate spread between SMEs and large firms remained stable in 2017 compared to 2016 but increased in 2018, as the reduction of large firms’ interest rate was higher than the reduction of SME interest rates during this period (2014-2018).

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 2008-17. They increased strongly in 2018, following a more moderate increase over 2014-2017.

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. The Greek government announced various actions 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 and started to provide loans in 2018. Both finds 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 since 2018 invests in high value-added and innovative early and growth stage companies.

Furthermore, various legislative tools continue to be used 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 and according to Law 4608/2019, the Greek government established the Hellenic Development Bank (HDB), which took 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 is 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 was completed in April 2019, with the adoption of the new legal framework (Law 4608/2019). The second phase is estimated to be completed by the end of 2019. HDB will deploy a list of new products by using both public and private funds for the support of SMEs within the next five years. HDB will target 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.

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Table 18.1. Scoreboard for Greece

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

EUR billion

..

..

..

44.9

41.6

39.1

48.1

48.1

46.9

48.4

44.7

41.1

Outstanding business loans, total

EUR billion

102

124

124

117

113

101

97

95

89

88

82

76.4

Share of SME outstanding loans

% of total outstanding business loans

..

..

..

38.5

36.8

38.8

49.7

50.6

52.6

55.3

54.4

53.8

New business lending, total

EUR billion

..

36.5

36.3

20.7

29.4

21.8

24.3

14.9

6.9

5.8

7.3

11.4

New business lending, SMEs

EUR billion

..

12.5

13.0

4.4

5.2

4.1

3.7

2.3

1.2

1.1

1.1

1.2

Share of new SME lending

% of total new lending

..

34.2

35.6

21.4

17.8

18.9

15.0

15.6

17.0

18.4

15.5

10.18

Outstanding short-term loans, SMEs

EUR billion

..

..

..

..

..

..

..

18.1

17.6

18.8

17.0

15.1

Outstanding long-term loans, SMEs

EUR billion

..

..

..

..

..

..

..

30.1

29.3

29.6

27.7

25.9

Share of short-term SME lending

% of total SME lending

..

..

..

..

..

..

..

37.6

37.6

38.9

38.0

58.4

Government loan guarantees, SMEs

EUR billion

..

..

..

..

..

..

0.37

0.31

0.24

0.56

1.08

1.2

Non-performing loans, total

% of all business loans

4.60

4.30

6.70

8.70

14.2

23.4

31.8

29.4

31.0

30.3

30.5

32.5

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

..

..

41.2

44.1

43.2

..

..

Interest rate, SMEs

%

6.57

6.82

4.62

5.53

6.77

6.87

6.51

5.80

5.38

5.32

4.91

4.64

Interest rate, large firms

%

5.32

5.71

3.52

4.27

5.74

5.92

5.77

5.55

4.82

4.61

4.20

3.81

Interest rate spread

% points

1.25

1.11

1.10

1.26

1.03

0.95

0.74

0.25

0.56

0.71

0.71

0.83

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

51.4

40.5

49.4

46.7

45.9

46.2

49.2

39.8

25.7

20.7

Percentage of SME loan applications

SME loan applications/ total number of SMEs

..

..

37.9

39.6

30.8

29.9

21.4

25.5

18.8

21.5

17.5

23.0

Rejection rate

1-(SME loans authorised/ requested)

..

..

25.8

24.5

33.8

28.3

26.0

21.5

19.9

18.2

16.2

20.5

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

..

..

..

..

..

..

Non-bank finance

Venture and growth capital

EUR million

19.0

32.7

16.7

25.0

10.1

..

4.8

12.6

36.8

38.0

44.5

83.2

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

72

-49

50

-60

..

..

160

193

3

17

86.9

Leasing and hire purchases

EUR billion

7.28

7.87

7.50

7.28

6.85

6.22

3.36

4.08

4.72

4.40

4.25

3.96

Factoring and invoice discounting

EUR billion

1.28

1.73

1.77

1.73

1.49

1.53

1.41

1.69

1.69

1.72

1.74

1.93

Other indicators

Payment delays, B2B

Number of days

..

25

34

30

35

40

43

41

36

47

47.

33

Bankruptcies, SMEs

Number

513

359

355

355

445

415

392

330

189

108

123

114

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

-30

-1

0

25

-7

-6

-16

-43

-43

14

-7

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!19. Hungary

According to the preliminary data of the Hungarian Central Statistical Office, at the end of 2017, 724 000 enterprises operated in Hungary, 99.86% of which — i.e. 723 000 enterprises — qualified as SMEs.

In 2018, the Hungarian economy expanded at an exceptional rate, exceeding analysts’ expectations. The swift rise of Hungarian GDP was substantially influenced by corporate investment growth. In parallel with output and investments, the loans taken out by companies increased more than predicted during the year.

Corporate credit increased by 13.5 per cent annual growth rate in 2018. Half of the expansion was linked to the SME sector. Loans to SMEs rose by 10 percent year-on-year, within which the micro-firm segment expanded the most, with a 14% year-on-year increase.

Banking competition intensified according to Hungarian National Bank’s (MNB) report. This trend was accompanied by an improvement in economic prospects and an easing of credit terms. Based on the banks’ responses to the Lending Survey, credit conditions were eased for all corporate size categories in the fourth quarter, which mainly affected non-price conditions.

The Funding for Growth Scheme and the Market-based Lending Scheme both contributed to incentivising the SME lending market, however they did not have any significant impact on the lending structure in 2018. Based on the experience gained from these, at the beginning of 2019 the MNB will launch the Funding for Growth Scheme Fix (FGS fix) with more targeted features: a total amount of HUF 1 000 billion to finance new investments by SMEs.

The interest rate on small-amount HUF loans has remained unchanged. There was no major change in the average interest rate of forint loans below EUR 1 million, as they came in at 2.44 per cent, respectively.

2018 was one of the most active years in the history of the Hungarian venture capital and private equity market. Not only the number of transactions but also the total amount invested increased significantly. The majority of transactions were made at the seed stage.

The proportion of guaranteed loans and the ratio of government-backed loan guarantees to GDP is at an exceptionally high level in Hungary, in comparison to other European countries.

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Table 19.1. Scoreboard for Hungary

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

HUF Billion

5 280

5 823

5 379

4 783

4 797

5 014

5 064

4 831

4 942

4 889

4 802

5 296

Outstanding business loans, total

HUF Billion

8 466

9 613

8 959

8 770

8 825

7 892

7 648

7 761

7 355

7 073

7 545

8 562

Share of SME outstanding loans

% of total outstanding business loans

62.36

60.58

60.05

54.54

54.36

63.53

66.21

62.25

67.20

69.13

63.65

61.86

New business lending, SMEs

HUF Billion

3 851

4 384

3 660

3 531

3 585

3 870

4 662

4 302

3 665

4 187

4 443

3 743

Short-term loans, SMEs

HUF Billion

2 473

2 966

2 832

2 775

2 767

3 052

2 654

2 570

2 424

2 708

2 727

2 002

Long-term loans, SMEs

HUF Billion

1 377

1 418

828

756

818

818

2 008

1 732

1 241

1 478

1 274

1 741

Share of short-term SME lending

% of total SME lending

64.23

67.66

77.37

78.59

77.18

78.86

56.93

59.75

66.14

64.69

68.16

53.48

Government loan guarantees, SMEs

HUF Billion

308.8

352.1

409.2

377.1

343.4

251.9

350.0

346.2

348.7

469.3

525.7

725.5

Government guaranteed loans, SMEs

HUF Billion

381.4

436.4

600.3

472.0

437.2

314.8

458.0

433.8

429.4

568.6

731.0

894.2

Non-performing loans, total (amount)

HUF Billion

..

..

..

832

1 155

1 272

1 124

961

697

577

526

472

Non-performing loans, total

% of all business loans

3.10

4.70

10.10

12.8

17.4

17.7

16.1

13.7

9.6

5.4

3.3

5.5

Non-performing loans, SMEs

% of all SME loans

 

5.40

8.90

12.8

15.9

20.5

18.6

20.7

13.7

6.3

4.4

3.8

Interest rate, SMEs

%

10.19

11.25

12.31

8.99

9.38

9.7

7.4

5.1

4.7

4.2

3.3

2.44

Interest rate, large firms

%

8.97

10.28

11.07

..

..

8.9

5.9

4.1

2.4

2.8

1.8

2.0

Interest rate spread

% points

1.22

0.97

1.24

..

..

0.80

1.50

1.00

2.30

1.40

1.50

0.44

Collateral, SMEs

% of SMEs needing collateral to obtain bank lending

..

..

..

..

..

..

..

71

64.5

60.1

53.4

..

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

..

..

68.8

67

84.4

71.6

49.2

..

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

81.5

..

..

..

..

..

Non-bank finance

Venture and growth capital

HUF Million

3 949

13 782

720

6 982

11 308

19 361

15 880

18 759

27 742

12 070

11 470

28.6

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

249.00

-94.78

869.72

61.96

71.22

-17.98

18.13

47.89

-56.49

-4.97

149.88

Leasing and hire purchases

HUF Million

..

..

..

..

..

..

..

..

..

274 766

243 743

Factoring and invoicing

HUF Million

..

..

..

..

..

..

..

..

..

126 038

25 951

Other indicators

Payment delays, B2B

Number of days

16.30

19.00

19.00

15.00

22.00

20.00

..

17.40

17.40

..

..

Bankruptcies, total

Number

153

168

212

232

279

301

376

644

488

377

322

401

Bankruptcies, total (growth rate)

%, Year-on-year growth rate

..

10.35

25.65

9.5

20.4

7.9

24.7

71.3

-24.2

-22.9

-14.4

24.34

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!20. Indonesia

Based on data published by Ministry of Cooperatives and SMEs of Republic of Indonesia, there were 64 194 057 SMEs in 2018, which made up 99.99% of the total business population and employed more than 116 million people. In this report, SMEs consist of micro, small and medium-sized enterprises.

Outstanding loans to all businesses stood at IDR 5 931.61 trillion in 2018, with 19.68% of that amount (IDR 1 167.45 trillion) allocated to SMEs. Outstanding loans continued to grow in double digits in the past eight years (2011-18), with an average yearly growth rate of 16.42%. Outstanding loans to SMEs also rose by 14.82% in this period.

Despite total outstanding loans increasing significantly, non-performing loans (NPLs) remained under 5%. In fact, in the last three years (2016-18), NPLs have been declining both for SMEs (from 4.05% to 3.35%) and for total business (from 2.96% to 2.40%).

The share of short-term loans fell by 16.29% in the 2011-18 period, from IDR 120.80 trillion in 2011 to IDR 101.11 trillion in 2018. Meanwhile long-term loans in the same period grew by 192.49% from IDR 235.9 trillion in 2011 to IDR 1 038.05 trillion in 2018, with a yearly average of around 17.58%. The increasing trend in long-term loans illustrates lenders’ higher trust in Indonesian SMEs.

In the period of 2011-2018, interest rates on loans declined for all business, from 14.53% to 12.69% for SMEs and 1.27 percentage points for large company from 12.28% to 11.01%. Interest rates are declining in Indonesia but are still very high compared to the average in other countries.

Financing distributed by the Venture Capital Company shows a significant increase, reaching out IDR 8.46 trillion in 2018, a 94.59% increase compared to 2012. Every year in the 2012-2018 period, the amount of financing grew constantly, with an average growth rate of 13.02%.

Other non-bank finance indicators also gained momentum. Leasing and hire purchases increased by 7.01% in 2018. This indicator shows around 207.54% growth in total during the 2007-2018 periods. Factoring activities exhibit similar trends. During 2007-2018, factoring experienced strong growth (603.80%). Factoring increased by around 16.28% in 2018.

Most SMEs in Indonesia are experiencing problems in accessing financing. Based on this observation, Indonesian Government launched a financing scheme called People Business Credit Programme or Kredit Usaha Rakyat (KUR) in 2007. KUR’s objective is to increase SMEs access to finance and works as a bridge for SMEs to obtain a financing scheme from a financial institution. A total of IDR 499.32 trillion have been allocated as part of this programme during 2007-18 and distributed to all provinces in Indonesia. KUR has managed to maintain high-quality credit, with a very low NPL rate. In 2018, the NPL rate for KUR stood at just 0.24%.

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Table 20.1. Scoreboard for Indonesia

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

IDR trillion

110.1

127.0

127.4

389.0

476.8

551.5

637.3

733.0

792.1

952.2

1 059.2

1 167.5

Outstanding business loans, total

IDR trillion

1 001.9

1 307.7

1 307.8

1 777.8

2 217.5

2 726.8

3 321.2

3 707.7

4 093.9

4 908.4

5 320.1

5 931.6

Share of SME outstanding loans

% of total outstanding business loans

10.99

9.71

10.20

21.86

21.46

20.19

19.15

19.74

19.32

19.38

19.90

19.68

Outstanding short-term loans, SMEs

IDR trillion

..

..

..

102.6

120.8

141.7

195.0

215.4

100.1

115.0

94.3

101.11

Outstanding long-term loans, SMEs

IDR trillion

..

..

..

286.1

354.9

408.7

440.9

516.5

623.8

729.0

901.0

1 038.1

Share of short-term SME lending

% of total SME lending

..

..

..

26.40

25.39

25.74

30.67

29.43

13.83

13.63

9.47

8.88

Government guaranteed loans, SMEs

IDR trillion

17.2*

34.2

40.9

40.3

22.8

94.4

96.7

120.33

Direct government loans, SMEs

IDR trillion

..

0.04

0.41

1.07

1.15

1.25

1.43

1.15

1.56

1.25

0.41

0.04

Non-performing loans, total

% of all business loans

4.08

3.20

3.35

2.55

2.16

1.87

1.77

2.16

2.49

2.40

2.63

2.40

Non-performing loans, SMEs

% of all SME loans

4.80

3.87

4.22

3.97

3.43

3.23

3.19

4.00

4.20

3.35

3.89

3.35

Interest rate, SMEs

%

16.30

16.79

16.60

14.89

14.53

13.99

14.14

14.54

13.99

12.69

13.06

12.69

Interest rate, large firms

%

12

13

13

12.73

12.28

11.60

11.88

12.48

12.51

11.01

11.39

11.01

Interest rate spread

% points

4.14

3.30

3.79

2.16

2.25

2.39

2.26

2.06

1.48

1.68

1.67

1.68

Non-bank finance

Venture and growth capital

IDR trillion

..

..

..

..

..

4.3

6.0

6.9

7.2

8.5

7.1

8.46

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

..

..

..

..

..

38.70

14.68

4.38

17.69

-16.26

18.93

Leasing and hire purchases

IDR trillion

36.5

50.7

46.5

53.7

76.6

105.1

117.4

111.0

105.4

97.7

104.8

112.20

Factoring and invoice discounting

IDR trillion

2.2

2.2

2.0

2.3

3.9

5.1

7.7

9.4

10.7

11.5

13.3

15.48

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

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!21. Ireland

Irish SMEs account for 99.8 percent of all active enterprises and to just over 68% of those employed.

Debt levels of Irish businesses are declining steadily, and have reduced 43% since 2010, from EUR 27.1 billion to EUR 15.5 billion in 2018.

Gross new lending to core SMEs was EUR 3.5 billion in 2018, representing a 3.2% annual decrease.

Loan approval rates continue to be stable, with 86% of all applications for the period April – September 2018 (excluding “still pending”) either being fully or partially approved.

The interest rate spread of 2.15, between large (2.15%) and small loans (4.3%), remains in line with 2017, when it had fallen for the first time since 2007.

The amount of venture capital raised by Irish SMEs declined in 2018, to EUR 738 million, marking a 26% decrease on 2017 figures. Figures for Q1 2019 show that while there was again a decline in funding raised, in underlying terms there has been an increase in activity, with 75 companies receiving funding in Q1 2019 compared to 43 in the same quarter last year.

Bankruptcies decreased again in 2018 after an increase was recorded in 2017, this continues the trend of overall decline since their peak in 2011. Figures for 2018 show a 25% decline compared to 2017 figures, bringing bankruptcies down to their lowest level since 2007.

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. While not targeted specifically at those impacted by Brexit, the Future Growth Loan Scheme and the Business Finance Advisory Hub also aim to aid viable SMEs access appropriate credit.

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

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

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

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

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

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

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Table 21.1. Scoreboard for Ireland

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

EUR Billion

..

..

..

27.1

27.34

25.7

24.52

21.4

19.31

16.11

15.82

15.06

Outstanding business loans, total

EUR Billion

56.08

59.57

52.5

42.42

40.31

38.06

36.65

31.79

29.82

28

27.74

29.55

Share of SME outstanding loans

% of total outstanding

..

..

..

63.89

67.82

67.51

66.89

67.32

64.78

57.54

57.04

50.96

New business lending, SMEs

EUR Million

..

..

..

2 284

2 211

1 990

1 905

2 401

2 646

3 235

3 682

3 468

Outstanding short-term loans, SMEs

EUR Billion

17.26

15.02

10.93

6.05

3.81

3.06

3.02

2.39

1.79

2.03

2.52

2.45

Outstanding long-term loans, SMEs

EUR Billion

2.12

1.93

1.34

0.93

0.58

0.54

0.6

0.78

1.09

1

0.73

0.81

Share of short-term SME lending

% of total SME lending

88%

87%

88%

85%

85%

82%

80%

67%

39%

51%

71%

67%

Non-performing loans, total

% of all business loans

..

..

..

..

17.69

23.66

26.14

23.88

17.16

13.92

10

7.7

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

41

41

27

26

18.7

22.6

11.1

Interest rate, SMEs

%

6.23

6.67

3.98

3.88

4.68

4.34

4.3

4.78

4.77

4.65

4.28

4.3

Interest rate, large firms

%

5.95

6.19

3.22

2.86

3.33

2.81

2.76

2.98

2.43

2.18

2.13

2.15

Interest rate spread

% points

0.28

0.48

0.76

1.02

1.35

1.53

1.54

1.8

2.34

2.47

2.15

2.15

Collateral, SMEs

% of SMEs needing collateral

..

..

..

..

..

..

..

41

40

46

41

39

Percentage of SME loan applications

SME loan applications/ total SMEs

..

..

..

..

36

39

36

31

30

23

21

20

Rejection rate

1-(SME loans authorised/ requested)

..

..

..

..

30

24

20

14

15

16

15

14

Utilisation rate

SME loans used/ authorised

..

..

..

..

..

..

81

82

84

75

75

83

Non-bank finance

Venture and growth capital

EUR Million

226

243

288

310

274

269

285

401

522

888

994

738

Venture and growth capital (growth rate)

%, Year-on-year growth rate

..

7.53

18.61

7.67

-11.54

-2

5.95

40.65

30.3

70.1

11.92

-25.75

Other indicators

Bankruptcies, SMEs

Number

344

613

1 245

1 386

1 410

1 317

1 119

1 007

816

642

720

543

Bankruptcies, SMEs (growth rate)

%, Year-on-year growth rate

..

78.2

103.1

11.33

1.73

-6.6

-15.03

-10.01

-18.97

-21.32

12.15

-24.58

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!22. Israel

Small and medium enterprises (SMEs) constitute the overwhelming majority of companies in Israel. As of 2017, there were 559 567 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) is focusing on leading technology-based start-ups and SMEs, the SMBA is catering to all SMEs in Israel’s main economic sectors through business management training and coaching, subsidised access to finance (for example, through the national loans guarantee programme) and provision of business development centres (MAOF centres).

A central credit database for household and SME was launched in April 2019. The database is expected to improve competition and data accessibility in the Israeli credit market. In January 2017, a 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. In February 2019 Bank Leumi completed the sale of Leumi Card (the bank's credit card company) to Warburg-Pincus, an American private equity firm. In April 2019 Bank Hapoalim issued 65% of Isracard (the bank's credit card company) in an IPO, after failing to find a buyer. The bank has to sell the rest of its holdings not later than January 2021.

In 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.

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Table 22.1. Scoreboard for Israel

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

ILS billion

169.3

171.2

161.6

173.8

177.7

187.0

186.7

211.9

244.6

259.6

266.1

281.8

Outstanding business loans, total

ILS billion

413.9

460.9

425.2

438.9

458.6

450.4

445.7

447.9

415.6

435.5

444.4

476.9

Share of SME outstanding loans

% of total outstanding business loans

40.9

37.14

38.01

39.6

38.75

41.52

41.89

47.31

58.86

59.61

59.88

59.09

Government loan guarantees, SMEs

ILS million

27

17

121

164

116

116

215

232

257

184

144

144

Government guaranteed loans, SMEs

ILS million

170

109

757

1 028

890

1 057

1 951

2 112

2 340

1 838

1 600

1 604

Non-performing loans, total

% of all business loans

..

..

..

..

..

..

..

..

2.77

2.18

1.57

1.25

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

..

..

..

2.13

1.77

1.5

1.31

Interest rate, SMEs

%

..

..

..

..

..

..

..

..

3.96

3.84

4.02

4.06

Interest rate, large firms

%

..

..

..

..

..

..

..

..

2.95

2.89

3.05

2.98

Interest rate spread

% points

..

..

..

..

..

..

..

..

1.02

0.95

0.97

1.08

Non-bank finance

Venture and growth capital

USD billion

1.76

2.08

1.12

1.22

2.08

1.88

2.95

3.77

4.75

5.10

5.52

6.47

Venture and growth capital (growth rate)

%, year-on-year growth rate

..

18.2

-46.2

8.9

70.5

-9.6

57.3

27.6

26.1

7.2

8.3

17.3

Other indicators

Payment delays, B2B

Number of days

..

..

..

..

..

..

..

..

..

57.2

53

28

Bankruptcies, SMEs

Number

..

..

2 061

2 834

3 737

5 000

5 610

5 322

5 175

7 900

..

..

Bankruptcies, SMEs (growth rate)

%, year-on-year growth rate

..

..

..

37.51

31.86

33.8

12.2

-5.13

-2.76

52.66

..

..

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!23. Italy

Small and medium-sized enterprises dominate the business landscape in Italy, accounting for nearly 80% of the industrial and service labour force, and generating about two-thirds of turnover and value added.

Weak cyclical conditions in the second half of the year swiftly affected lending markets: after increasing at a sustained pace throughout 2018, business loans resumed their decline in the first half to 2019. Credit weakened slightly for large firms, but contracted markedly for smaller ones, exacerbating an already sluggish loan dynamics.

Credit standards remained loose overall, but gradually tightened from the second half of 2018, owing to higher funding costs for banks and a gloomier economic outlook. Business borrowing rates stood at historically low levels, but collateral requirements remained stable at a high level compared with the past.

Credit quality continued to improve, partly reflecting the cyclical upswing observed in recent years: the ratio of SME new non-performing loans to outstanding loans fell below the levels observed before the global financial crisis. The stock of non-performing loans dropped further, mainly as a result of large sales.

Equity financing for SMEs rose sharply in 2018 compared to the previous year, driven by an unprecedented growth in the early stage segment; resources devoted to firms of all sizes almost tripled, after plummeting by more than 40% in 2017.

Business-to-business payment delays stabilised overall, but the economic slowdown gradually led to a worsening in payment patterns: both agreed timeframes and average delays in the settlement of invoices increased somewhat for smaller firms.

Bankruptcies fell for the fourth year in a row, down by nearly 7% compared to the previous year and well below the peak observed in 2014.

The wide range of policies enacted or ramped up in response to the financial crisis gradually shifted in recent years from a broad-based countercyclical support to more targeted initiatives aimed at pursuing specific goals.

Credit guarantee schemes traditionally played a crucial role in easing SME access to finance. The Central Guarantee Fund continued to expand its activity, reaching a new high in 2018: it provided EUR 13.7 billion in guarantees for EUR 19.3 billion worth of loans. Its recent reform, aimed at better fitting the need of the potential beneficiaries through the introduction of a new evaluation system of firms’ creditworthiness, came into effect in early 2019.

Long-term individual savings plans (piani individuali di risparmio or PIR) were introduced in early 2017 to channel private savings towards investments in financial instruments issued by Italian companies. In order to foster the development of small and medium-sized enterprises, the 2019 Budget Law amended the rules on PIR funds by requiring them to invest part of the portfolio in financial instruments issued by Italian SMEs and in venture capital funds. However, these investments were relatively risky and characterised by low liquidity, partly owing to the limited size of the markets for securities issued by smaller firms. Since January 2019, net subscriptions virtually dried up following legislative changes.

Initiatives have been recently undertaken to support the development of a more mature innovation ecosystem. The National Innovation Fund, established by the 2019 Budget Law, is slated to become one of the leading European venture capital operators, acquiring qualified minority stakes in start-ups, scale-ups and innovative SMEs, while acting as a catalyst for private and international capital.

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Table 23.1. Scoreboard for Italy, 2007-18

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

EUR billion

187

191

193

210

206

204

196

192

188

175

170

165

Outstanding business loans, total

EUR billion

998

1067

1057

1122

1134

1118

1061

1025

1016

985

960

959

Share of SME outstanding loans

% of total business loans

18.7

17.9

18.3

18.7

18.2

18.2

18.5

18.7

18.5

17.8

17.7

7.2

Short-term loans, SMEs

EUR billion

59

56

52

50

48

47

42

39

35

31

28

27

Long-term loans, SMEs

EUR billion

115

120

125

136

133

128

122

115

112

103

101

100

Total short and long-term loans, SMEs

EUR billion

174

177

177

186

181

175

164

155

147

134

130

127

Share of short-term loans, SMEs

% of total short and long-term SME loans

34.0

31.9

29.3

26.9

26.4

26.6

25.7

25.3

23.8

22.9

22.0

21.3

Direct government loans, SMEs

EUR million

337

373

255

276

272

252

390

597

392

418

431

684

Government guaranteed loans, SMEs (CGF)

EUR million, flows

2 300

2 353

4 914

9 119

8 378

8 190

10 811

12 935

15 065

16 703

17 462

19 314

Government loan guarantees, SMEs (CGF)

EUR million, flows

1 146

1 160

2 756

5 225

4 435

4 036

6 414

8 392

10 216

11 570

12 260

13 731

Non-performing loans, SMEs

EUR million

..

22 865

27 953

35 243

38 033

43 812

48 387

53 715

56 189

54 947

50 604

46 928

Non-performing loans, SMEs

% of total SME loans

..

12.0

14.5

16.8

18.4

21.5

24.6

28.0

30.0

31.3

29.8

28.4

Interest rate, SMEs

%

6.3

6.3

3.6

3.7

5.0

5.6

5.4

4.4

3.8

3.2

3.1

3.1

Interest rate, large firms

%

5.7

4.9

2.2

2.2

3.3

3.8

3.4

2.6

2.1

1.8

1.8

1.8

Interest rate spread

%

0.6

1.4

1.4

1.5

1.7

1.8

2.0

1.8

1.7

1.4

1.3

1.3

Collateral, SMEs

%

54

54

52

53

55

54

55

55

56

57

57

57

Rejection rate

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

3.1

8.2

6.9

5.7

11.3

12.0

8.9

8.4

6.0

4.0

4.3

4.6

Utilisation rate

SME loans used / authorised

79.7

80.7

80.7

82.8

83.6

85.7

86.7

87.2

86.9

84.7

84.4

84.8

Non-bank finance

Venture capital investments (early stage), SMEs

EUR million

66

115

98

89

82

135

82

43

74

103

133

324

Growth capital investments (expansion), SMEs

EUR million

295

440

260

263

500

504

438

230

170

155

161

125

Growth capital investments (expansion), total

EUR million

641

796

371

583

674

926

914

1179

333

710

337

816

Other indicators

Payment delays, B2B (all firms)

Average number of days

..

20.4

21.3

17.3

16.2

17.5

17.3

16.1

15.0

13.4

12.3

12.2

Bankruptcies, total

Number

6 163

7 509

9 379

11 238

12 160

12 544

14 133

15 694

14 743

13 536

12 073

11 254

Bankruptcies, total

%, Year-on-year growth rate

..

21.8

24.9

19.8

8.2

3.2

12.7

11.0

-6.1

-8.2

-10.8

-6.8

Incidence of insolvency, total

per 10 000 enterprises

11.5

13.7

17.0

20.3

21.6

22.0

25.0

27.9

26.4

24.1

21.5

20.0

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!24. 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 declined continuously 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).

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Table 24.1. Scoreboard for Japan

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Debt

Outstanding business loans, SMEs

JPY trillion

260.8

259.1

253.1

248.3

245.6

243.6

247.2

251.7

258.4

265.6

275.4

Outstanding business loans, total

JPY trillion

374.5

385.0

379.3

366.1

366.9

370.4

369.7

387.2

395.2

405.1

415.5

Share of SME outstanding loans

% of total outstanding business loans

69.64

67.31

66.72

67.82

66.94

65.76

66.87

65.00

65.38

65.57

66.29

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

JPY trillion

29.4

33.9

35.9

35.1

34.4

32.1

29.8

27.7

25.8

23.9

22.2

Non-performing loans, total (amount)

JPY trillion

17.1

17.1

16.8

16.6

17.2

17.3

15.3

13.9

12.8

11.8

10.5

Non-performing loans, total

% of all business loans

4.56

4.45

4.42

4.54

4.68

4.66

4.14

3.60

3.23

2.91

2.52

Prime lending rate for short-term loans

%

1.88

1.68

1.48

1.48

1.48

1.48

1.48

1.48

1.48

1.48

1.48

Prime lending rate for long-term loans

%

2.30

2.40

1.65

1.60

1.40

1.20

1.20

1.10

1.10

0.95

1.00

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

%

1.64

1.53

1.23

1.10

1.04

1.02

0.91

0.88

0.80

0.67

0.61

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

%

1.73

1.67

1.46

1.29

1.21

1.16

1.10

1.00

0.94

0.80

0.80

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

%

1.67

1.49

1.26

1.19

1.10

1.03

0.88

0.85

0.78

0.62

0.58

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

%

2.05

1.99

1.76

1.65

1.54

1.42

1.30

1.19

1.10

0.97

0.90

Non-bank finance

Venture capital investments (all stages total)

JPY billion

193

136

87

113

124

102

181

117

130

152

197

Venture capital investments (all stages total)

%, year-on-year growth rate

..

-29.53

-36.03

29.89

9.73

-17.74

77.45

-35.36

11.11

16.92

29.60

Venture capital (seed and early stage)

% (share of all stages)

..

..

36.80

32.50

44.30

57.80

64.50

57.20

62.80

68.30

62.90

Venture capital (expansion and later stage)

% (share of all stages)

..

..

63.20

67.50

55.70

42.20

35.50

42.80

37.20

31.70

37.1

Leasing, SMEs

JPY billion

3 471

2 822

2 100

2 139

2 231

2 284

2 645

2 363

2 604

2 566

2 570

Other indicators

Bankruptcies, SMEs

Thousands

14.0

15.5

15.4

13.2

12.7

12.1

10.8

9.7

8.8

8.4

8.4

Bankruptcies, SMEs

%, year-on-year growth rate

..

10.76

-0.82

-13.96

-4.22

-4.81

-10.18

-10.37

-9.43

-4.17

-0.50

Bankruptcies, total

Thousands

14.1

15.6

15.5

13.3

12.7

12.1

10.9

9.7

8.8

8.4

8.4

Bankruptcies, total

%, year-on-year growth rate

..

11.04

-1.06

-13.95

-4.41

-4.79

-10.47

-10.35

-9.44

-4.15

-0.49

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!25. Kazakhstan

In 2018, SMEs made up 96.7% of all businesses in Kazakhstan. The share of people employed by SMEs was 37.5% of the total employed population. SMEs contributed 28.9% to the country’s GDP that same year (according to preliminary data for 9 months of 2018).

SME lending was on the rise in Kazakhstan since 2014 up to 2017. In 2017-2018 the SME loan portfolio has decreased. In 2018 the SME loan portfolio has decreased by 15.2%, at the same time, new lending to SMEs (over the period) increased by 14.0% over the last year. Due to the fact that the portfolio of loans to SMEs decreased, the share of loans to SMEs in the total portfolio of business loans also decreased to 28.3%. Despite the growth of new lending to SMEs (for the period), their share in the total amount of new business lending decreased to 18.5%. This indicates the growth of new lending (for the period) to large enterprises.

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 2018, the rate was 12.7%, while that of large enterprises was 11.2%.

Among non-bank sources of finance, leasing has the largest market and is steadily growing. In 2018, leasing and hire purchases were almost 4.6 times their 2010 level.

Non-performing loans with arrears of more than 90 days (NPL) in banks’ portfolio among both total business loans and SME loans decreased in 2018 to 7.4% and 9.3% respectively. Commercial banks fulfil requirements of the National Bank of Kazakhstan concerning maximum appropriate NPL level of no more than 10% of the total loan portfolio.

An important role in maintaining SMEs’ access to lending is played by the state, which places funds in commercial banks to provide concessional lending to SMEs during shortages of liquidity in the market. The largest placement of state funds for SME lending took place in 2018. The main part of loans was allocated in 2014-2016 to support SMEs in the manufacturing industry at a rate of 6% per annum, which are issued by banks on a revolving basis. Despite the fact that the largest part of the funds was allocated in 2014-2016, these funds are still used for lending to SMEs on a revolving basis. In addition, the State allocates new funds annually.

Since 2010, the government, through “Damu” Entrepreneurship Development Fund, has provided subsidised interest rate expense and loan guarantees for SMEs under the “Business Roadmap 2020” Programme. A new financial instrument in Kazakhstan, loan guarantees are becoming popular very quickly, escalating from just three guarantees in 2010 to 4 853 at the beginning of 2019.

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Table 25.1. Scoreboard for Kazakhstan

Indicator

Unit

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

KZT billion

1 508

1 571

1 708

1 389

1 341

1 412

1 283

1 788

2 060

3 105

2 789

2 364

Outstanding business loans, total

KZT billion

5 220

5 605

5 879

5 892

6 849

7 534

8 110

8 532

9 027

9 234

8 568

8 348

Share of SME outstanding loans

% of total outstanding business loans

28.89

28.02

29.06

23.58

19.58

18.74

15.83

20.95

22.83

33.62

32.55

28.32

New business lending, total

KZT billion

7 764

5 373

3 742

3 291

4 795

5 774

6 109

8 044

7 345

7 724

7 615

9 412

New business lending, SMEs

KZT billion

1 870

1 273

753.10

690 15

794 48

1 050

889 71

1 198

1 279

1 984

1 524

1 737

Share of new SME lending

% of total new lending

24.08

23.70

20.13

20.97

16.57

18.18

14.56

14.90

17.41

25.68

20.02

18.46

Short-term loans, SMEs

KZT billion

296

298

236

206

219

277

199

392

390

826

411

366

Long-term loans, SMEs

KZT billion

1 211.2

1 273

1 472

1 183

1 122

1 135

1 084

1 395

1 670

2 279

2 377

1 820

Share of short-term SME lending

% of total SME lending

19.66

18.96

13.82

14.83

16.34

19.64

15.51

21.95

18.93

26.60

14.75

16.75

Government loan guarantees, SMEs

KZT million

..

..

..

339

2 060

3 854

3 336

7 284

11 021

11 952

17 016

21 728

Government guaranteed loans, SMEs

KZT million

..

..

..

677

4 238

10 991

7 090

15 423

26 964

26 903

42 783

51 216

Direct government loans, SMEs

KZT billion

5.5

125.2

257.4

132.9

82.7

78.2

85.8

188.4

236.9

247.3

230.5

272.9

Non-performing loans, total

% of all business loans

..

..

..

..

..

29.80

31.15

23.55

7.95

6.72

9.31

7.38

Non-performing loans, SMEs

% of all SME loans

..

..

..

..

..

22.33

22.40

11.74

12.69

8.79

9.58

9.33

Interest rate, SMEs

%

14.28

15.67

14.01

13.34

12.49

12.10

12.46

11.48

12.95

14.01

13.66

12.71

Interest rate, large firms

%

12.77

14.88

14.04

12.72

11.08

10.58

10.07

10.01

13.47

14.49

12.39

11.22

Interest rate spread

% points

1.51

0.79

-0.03

0.62

1.41

1.52

2.39

1.47

-0.52

-0.48

1.27

1.49

Non-bank finance

Leasing and hire purchases

KZT billion

..

..

..

60.4

80.1

84.5

106.8

129.0

126.6

167.0

176.5

277.6

Factoring and invoicing

KZT million

..

..

..

..

..

7 889

15 125

33 160

37 655

..

..

..

Other indicators

Bankruptcies, total

Number

0

2

3

8

36

77

125

143

257

516

1 978

3 493

Bankruptcies, total (growth rate)

%, year-on-year growth rate

..

..

50.00

166.67

350.00

113.89

62.34

14.40

79.72

100.78

283.33

76.59

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!26. Korea

The share of outstanding SME loans has increased continuously from 2014, with a KRW 41 trillion increase in 2018. Meanwhile, the stock of outstanding loans for large firms decreased during the same period, by approximately KRW 0.5 trillion, resulting in an increase in the share of outstanding SME loans.

Outstanding short-term loans as a share of total loans have declined continuously between 2007 (75%) and 2018 (50%). Both the level of outstanding short-term loans and the level of outstanding long-term loans have increased continuously from 2007. However, the growth rate of outstanding short-term loans has been higher than that of outstanding long-term loans.

While the level of government guaranteed loans has been on the rise since 2011, government guaranteed loans to SMEs as a share outstanding business loans to these firms has decreased continuously from 2012. Between 2017 and 2018, the volume of government-guaranteed loans rose by 2.8%. The amount of direct lending to SMEs in 2018 was KRW 4.4 trillion, which is about 0.6% of all outstanding business loans to SMEs.

Since 2013, the rate of non-performing loans has decreased continuously. 1.1% of all SME loans were non-performing in 2018, below the 2017 figure (1.17%). On the other hand, 1.88% of all business loans were non-performing in 2018, indicating that large business loans are more liable to be non-performing than SME loans.

Interest rates for SMEs increased by about 0.2 percentage points from 3.62% to 3.82% in 2018. On the other hand, interest rates for large firms increased by about 0.14 percentage point from 3.31% to 3.45% in 2018, resulting in higher interest rate spread between loans to SMEs and to large firms. However, SME interest rates are still quite low on average.

Venture and growth capital investments increased rapidly in 2018. The growth rate of venture and growth capital was 43.89%, with investments going from KRW 2.38 trillion to KRW 3.42 trillion.

Leasing and hire purchases volumes rose by 0.05% in 2018, which implies that these instruments were stable in 2018.

Since the global financial crisis, the number of bankruptcies has steadily decreased. Payment delays decreased by 1.5 days, on average, in 2018.

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Table 26.1. Scoreboard for Korea

Indicators

Units

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Debt

Outstanding business loans, SMEs

KRW trillion

369

422

443

441

455

462

489

522

561

610

655

696

Outstanding business loans, total

KRW trillion

425

511

531

541

586

618

654

706

756

776

817

857

Share of SME outstanding loans

% of total business loans

86.8

82.6

83.5

81.5

77.7

74.7

74.7

74.0

74.2

78.6

80.2

81.2

Outstanding Short-term loans, total; loans for operation

KRW trillion

319

375

373

372

388

395

405

419

426

414

419

429

Outstanding Long-term loans, total; loans for equipment

KRW trillion

106

136

158

169

197

223

249

287

330

362

398

428

Share of short-term loans; loans for operation

KRW trillion

75.0

73.4

70.3

68.7

66.3

63.9

61.9

59.3

56.3

53.4

51.3

50.1

Government loan guarantees, SMEs

KRW trillion

40

43

56

56

55

57

60

60

61

63

66

68

Government guaranteed loans, SMEs

% of SME business loans

10.8

10.0

12.7

12.7

12.2

12.3

12.2

11.5

10.9

10.3

10.0

9.7

Direct government loans, SMEs

KRW billion

2 480

2 635

4 812

3 098

2 957

3 149

3 715

3 270

3 902

4 551

4 666

4 415

Non-performing loans, total

% of all business loans

0.81

1.41

1.6

2.6

1.73

1.66

2.39

2.09

2.56

2.06

1.76

1.88

Non-performing loans, SMEs

% of all SME loans

0.99

1.93

1.8

3.11

2.17

1.96

2.11

1.94

1.64

1.3

1.11

1.10

Interest rate, SMEs

%

7.04

7.61

6.18

6.52

6.36

5.93

5.11

4.69

3.95

3.63

3.62

3.82

Interest rate, large firms

%

6.27

6.81

5.62

5.98

5.81

5.50

4.87

4.51

3.79

3.40

3.31

3.45

Interest rate spread

%

0.76

0.79

0.56

0.54

0.55

0.43

0.24

0.18

0.16

0.24

0.31

0.37

Rejection rate

%, 1-(SME loans authorised/ requested)

..

..

..

..

..

..

..

6.90

3.70

12.20

12.90

15.50

Non-bank finance

Venture and growth capital

KRW billions

992

725

867

1 091

1 261

1 233

1 385

1 639

2 086

2 150

2 380

3 425

Venture and growth capital

(growth rate)

%

..

-26.9

19.7

25.8

15.6

-2.2

12.3

18.4

27.2

3.1

10.7

43.9

Leasing and hire purchases

KRW trillions

10.3

11.7

7.1

10.6

11.1

10.5

11.9

13.2

15.0

17.4

20.2

21.2

Other indicators

Payment delays, SMEs

Number of days past due date

11.0

12.1

9.9

12.1

11.7

9.1

9.7

10.0

9.2

13.3

8.9

7.4

Bankruptcies, total

Number

2 294

2 735

1 998

1 570

1 359

1 228

1 001

841

720

555

494

469

Bankruptcies, growth rate

Year-on-year growth rate, %

..

19.2

-26.9

-21.4

-13.4

-9.6

-18.5

-16.0

-14.4

-22.9

-11.0

-5.1

The full country profile is available at

https://doi.org/10.1787/061fe03d-en

copy the linklink copied!27. Latvia

Growth of the Latvian economy was considerably faster in 2017 and 2018 than in the previous years. Export, investments, private and public consumption are growing steadily. Export volumes have reached their highest-ever level. An increase is observed in almost all sectors of the national economy. Overall, in the three first quarters of 2018, the gross domestic product (GDP) increased by 4.7% achieving a higher increase than in 2017, when GDP increased by 4.6%. Taking into account economic growth in countries of the European Union (EU), as well as investments available from EU funds, economic growth is expected to remain stable also in 2019, even though at a slower rate.

In Latvia, 99.8% of economically active merchants and commercial companies are SMEs, and 92.1% of these SMEs are micro-enterprises.

Loans to SMEs dominate in the banking sector’s lending to non-financial corporations (NFCs), as SMEs play an important role in the domestic economy of Latvia – loans to SMEs comprised 74% (at the end 2018) of total loans to domestic NFCs. The outstanding amount of banking sector loans to SMEs decreased in 2018 by 8.3%. However, to a large extent this is attributed to structural changes in the Latvian banking sector (for instance, the withdrawal of the credit institution's licence). Excluding one-off effects, the SMEs loan stock did not change significantly (-1.0% year-on-year). In 2018, the new lending (flow) to SMEs was slightly higher than in 2017 (by 3.9%). Overall, the economic environment remains favourable, driven by investment growth and domestic demand. The balanced economic growth is expected to continue (the Bank of Latvia forecasts 2.9% real GDP growth in 2019) and will support credit demand.

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 programme) for firms lacking the financial credibility (collateral, net worth, cash flow and credit history) that is 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 to various target groups. ALTUM develops and implements state aid programmes to compensate for market shortcomings that cannot be resolved by private financial institutions.

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