Foreword

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

Financing SMEs and Entrepreneurs 2016 provides a wealth of information on debt, equity, asset-based finance, and framework conditions for SME and entrepreneurship finance, complemented with a review of recent policy measures to support access to finance in 37 countries. This fifth edition of the Scoreboard brings us a step closer to bridging the knowledge gap, and provides a solid evidence base to improve SME policy making and encourage a culture of evaluation.

The data show that after several years of serious difficulties, the financing situation of SMEs and entrepreneurs appears to have turned the corner. Between 2012 and 2014, lending to SMEs generally improved, including in countries such as Estonia, Greece and the United States, where credit had contracted the most after the financial crisis. Credit conditions also improved in the majority of countries covered in the Scoreboard, with a reduction of more than one percentage point in the average interest rate charged to SMEs in Chile, Italy, Spain and Mexico. Moreover, alternative sources of finance such as crowdfunding and factoring gained traction in 2012-14, although often from low levels. Nevertheless, small businesses, and particularly new and innovative ones, continue to face the consequences of market failures in accessing external financing.

Governments around the world continue to take action to tackle longstanding SME financing difficulties. Credit guarantees remain the most widely used instrument, with many countries expanding and introducing novel features to their credit guarantee programmes in 2014 and the first half of 2015. In addition, new policy initiatives are seeking to tailor programmes to the needs of fast-growing, innovative start-ups, by fostering the uptake of alternative financial instruments by small businesses, and by addressing financial hurdles that limit SME participation in global value chains.

The thematic chapter of this edition of Financing SMEs and Entrepreneurs 2016 focuses on business angel investments. It highlights the role of angel investing in bridging the financing gap for firms with a high risk-return profile at the seed and early stages, as well as their importance in providing business advice, mentoring and networking opportunities. The chapter underlines the need to improve data collection on angel activities, the majority of which are not registered and are therefore excluded from the analysis of the issue. Moreover, methodologies for data collection vary significantly across countries and are not transparent. A more solid evidence base would enable a better understanding of the potential of angel investment to finance SMEs and support the design of appropriate policy making.

This edition of the Scoreboard makes important strides in data harmonisation and analysis, by expanding the coverage of non-debt financial instruments, providing inflation-adjusted data and presenting more comprehensive information on sources and definitions. The OECD will continue to support governments in understanding SME financing trends, and developing appropriate policy responses, including by formulating effective approaches for the implementation of the G20/OECD High-level Principles on SME Financing. By strengthening access to both traditional banking and diverse alternative financing instrumvents and channels, we can unleash SMEs’ ability to invest, innovate and contribute to the productivity growth which is so sorely needed for more prosperous and inclusive societies.

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Angel Gurría,

OECD Secretary-General