Sustaining the continued growth of European SMEs relies, not least, on ensuring sufficient access to external finance. The provision of financing is indeed crucial at all stages of firms’ development from start-up to scale-up and well into their further growth, laying the foundations for the broadening of productive capacities and the creation of new jobs.
SMEs are typically considered to be in disadvantaged position regarding access to finance. Their smaller scale and level of sophistication implies that they also tend to face disproportionate challenges relative to larger firms, when it comes to securing credit from banks or raising capital from public markets. These relate to difficulties regarding the signalling of their creditworthiness to lenders, the irregularity in cash flows and thereby inability to follow fixed repayment schedules, as well as their limited capacities in collateral provision.
Recent evidence, however, indicates that despite inherent weaknesses and persistent market imperfections the environment for SME access to financing is gradually improving across the EU. This suggests that the ongoing economic recovery and the improved performance by SMEs has also been accommodated by improvements in their financing conditions. According to the latest findings of the Survey on Access to Finance of Enterprises (SAFE) conducted annually by European Central Bank (ECB) and the European Commission, the importance of ‘access to finance’, as a critical concern for EU SMEs has diminished substantially over the last five years, as compared to other business challenges. In 2018, only 7 % of SMEs reported ‘access to finance’, as their most serious concern (see chart ‘Access to finance as an important problem for SMEs’). This is a notable improvement, as compared to the 17 % reported in 2009, or even 15 % reported in 2013.
Today, SMEs’ most pressing problem appears to be the availability of skilled staff and experienced managers. In the context of the latest SAFE, such access to skilled and experienced personnel was identified as a critical problem by 25 % of respondents across the EU – up from 14 % in 2013 (see chart ‘Important problems faced by SMEs in the EU). Finding customers remains an equally important issue for 23 % of respondents, while 13 % of SMEs also reported difficulties due to the regulatory burden as their most important concern.