GS Andrea Benassi

Congress of the Notaries of Europe – 28 June 2011

How can access to finance be made easier following the credit crunch?

Abstract

  • Thanks to interventions of EU Commission (Temporary State Aid Framework), the European Investment Bank (30 Billion global loans for SMEs), European Central Bank (provision of liquidity) and numerous recovery programmes at Member State level a credit crunch for SME has been avoided.
  • On the other side, there is no doubt that access to finance has to become more difficult (banks are more risk sensitive, ask for more collateral and more information) and more expensive (higher interest rates, higher refinancing costs) in course of the crisis.
  • Sufficient access to finance for SMEs is a precondition for economic recovery; only if SMEs are able to invest again,the economy and also employment can sustainably grow.
  • In order to improve access to finance, actions have to be taken at different level:
  • European level:
  • The implementation of Basel III (Capital Requirement Directive IV) has to ensure that the conditions for banks to lend to SMEs will not worsen. SME lending was not the cause of the crisis and there is no reason to make SME lending more expensive for banks. At the same time, the new regulation has to respect the specific situation of the decentralised banking sector in Europe (Cooperative Banks, Saving Banks) as regards their regulatory capital. Therefore, UEAPME fully supports the position of MEP Othmar Karas / the European Parliament.
  • The next generation of European Programmes has to give a specific focus to the new needs of finance for SMEs and should provide support measures not only for loan guarantees, but also for equity types of instruments to finance riskier projects like start-ups, innovation and business transfers. Therefore, UEAPME cooperates with the EIB Group and with DG Enterprises.
  • National level:
  • Financial intermediaries at national level – like OSEO – have to support the banking sector to finance SMEs by risk sharing models like loan guarantees and mezzanine instruments using European Programmes, Structural Funds and national means.
  • An important aspect of creditworthiness for SMEs is their balance sheet structure. Already high debt ratios make it difficult to obtain additional loans. However, high leverage and low equity ratios are also a result of wrong State aid and tax incentives, both support rather debt financing than equity financing and should be reviewed by governments.
  • Company level:
  • SMEs themselves have to improve their creditworthiness and their investor readiness by improving their business plans and their financial reporting, which is also an important task for our national and sectoral organisations.
  • At the same time we expect from the banking sector to improve its communication and transparency towards their SME clients. SMEs need to know what banks expect from them and how their economic situation is judged by the banks.

MAISON DE L'ECONOMIE EUROPEENNE - RUE JACQUES DE LALAING 4 - B-1040 BRUXELLES

TEL +32 (0)2 230 75 99 - FAX +32 (0)2 230 78 61 - E-MAIL