COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(94) 207 final 
Brussels, 03.06. 1994 
COMMUNICATION FROM THE COMMISSION 
INTEGRATED PROGRAMME IN FAVOUR OF SMEs 
AND THE CRAFT SECTOR 
THE INTEGRATED PROGRAMME 
THE STRATEGIC CONTEXT 
THE WHITE PAPER 
WHY AN INTEGRATED PROGRAMME ? 
THE INTEGRATED PROGRAMME: A NEW APPROACH 
FROM THE FIRST TO THE SECOND GENERATION OF ENTERPRISE POLICY 
I. THE EXISTING FRAMEWORK 
1. A panoply of Community measures in favour ofSMEs already exists 
in different Community policies 9 
2. Acceleration of activity within the last 18 months by the European Institutions 
which leads from the first to the second generation of enterprise policy 10 
3. This vigorous political commitment has already resulted in several 
practical measures 11 
H. NEW MEASURES 
A. CONCERTED ACTIONS 14 
1. COORDINATION INITIATIVE TO SIMPLIFY THE ENVIRONMENT 
FOR ENTERPRISES 14 
2. CONCERTED ACTION ON SUPPORT INITIATIVES FOR 
ENTERPRISES 
B. CONTRIBUTIONS FROM THE EUROPEAN UNION 
1. IMPROVING THE ENVIRONMENT FOR ENTERPRISES 
1.1. Consideration of enterprises' needs when compiling Community 
legislation 
1.2. Improving the conditions for the transfer of enterprises 
1.3. Improving the fiscal environment for SMEs 
1.4. Improving payment periods between enterprises 
1.5. Facilitate an environment favourable to the creation of new 
employment in local services 
2. SUPPORT MEASURES FOR ENTERPRISES 
2.1. Improving access to finance and credit 
2.2. Supporting cooperation between enterprises 
2.3. Support for improving management quality 16 
20 
21 
21 
22 
23 
25 
27 
27 
29 
30 
33 
CONCLUSIONS 35 
COMMUNICATION FROM THE COMMISSION 
ON THE IMPLEMENTATION OF AN INTEGRATED PROGRAMME 
IN SUPPORT OF SMEs 
THE STRATEGIC CONTEXT 
THE WHITE PAPER 
1. The triple problems of growth, competitiveness and employment are at the 
core of the European Union's priorities. The White Paper defines a strategic 
framework for comprehensive measures in the short and medium term, to 
meet these priorities. There is now unanimous agreement on the vital role 
to be played by small and medium-sized enterprises (SMEs) in achieving 
these objectives. 
2. The third report, "Enterprises in Europe", reveals that 92.4% of Community 
enterprises employ fewer than 10 people, while 7.5% employ between 10 
and 499. The number of enterprises with more than 500 employees 
represent only 0.1% of the total. The micro-enterprise category (0 to 9 
employees) makes a greater contribution to employment than large 
enterprises (33.3% compared with 24.7%), while SMEs with 10 to 499 
employees employ 42% of the labour force. 
3. There are many reasons why the main employment potential of the 1990s is 
in SMEs: 
It is clear from the SME Observatory Report that employment 
growth in the Community is largely attributable to micro and small 
enterprises; 
the services sector, where SMEs predominate, has been an important 
source of jobs in recent years; in addition, it is generally recognized 
as still having employment potential, for example in the area of 
services to individuals and tourism;. 
the activities least sensitive to international competition are often 
carried out by small enterprises with strong links to their local 
environment; this is particularly true of many craft activities; 
overall, SMEs employ more young people and women - categories 
which are especially vulnerable to unemployment - than large 
enterprises; 
- SMEs employ more part-time workers than large enterprises; they 
could therefore play an important role in improving "job-sharing" 
opportunities; 
the practice of large enterprises in respect of hiving off and 
contracting out their services or production towards SMEs, helps to 
stimulate the development of SMEs and to maintain employment 
levels; 
large enterprises are in a period of restructuring, decentralization and 
outsourcing. 
SMEs are therefore well-equipped to meet the challenge facing them. 
However, several weaknesses in SMEs hinder the full exploitation of their 
growth and employment potential. Closures of SMEs, which appear to be 
increasing in most Member States, are a cause for concern (between 35% 
and 40% of enterprises cease activity within three years of start-up, and 
60% within eight to ten years after start-up). 
Another weakness is the difficulty which SMEs have in overcoming the 
increasing complexity of their legal and administrative environment. The 
structural capacity of SMEs to deal with this is hampered by the fact that 
most management functions continue to be carried out solely by the head of 
the enterprise himself. This is a particularly heavy burden for self-
employed persons, who in 1991 already numbered 16.4 million. In many 
cases enterprises are doing work which should be undertaken by public 
administrations (VAT, collecting tax and employees' social security 
contributions). Adjusting to the new rules and procedures linked to the 
Internal Market are still a burden for some SMEs. 
In addition, the difficulties of obtaining finance are often an obstacle for 
SMEs, both when starting up and at certain phases in their development. 
Lastly, many of the difficulties encountered by SMEs, both in dealing with 
the complexity of the aàninistrative environment and in gaining access to 
sources of finance, arise from a structural weakness in their management 
capacity. 
WHY AN INTEGRATED PROGRAMME ? 
5. The need for an Integrated Programme for SMEs and the craft sector is 
apparent, both from the analysis of the economic situation contained in the 
White Paper, and from the Council Resolution of 22 November 1993. 
While the role of SMEs as a source of employment is mainly a matter for 
the enterprises themselves, it is nonetheless true that all Member States 
have developed a variety of measures at national, regional or local level, 
which are designed to deal with those weaknesses of SMEs likely to 
restrain their growth because of their small size (cf. paragraph 4 above). 
Generally these measures which have to respect Community regulations on 
competition policy aim to: 
reduce the burden on enterprises, and particularly SMEs, arising 
from the administrative and legal environment; 
overcome enterprises'financing difficulties; 
support the enterprises in their efforts to handle the complexity of 
their administrative tasks and to develop strategic policies, 
particularly as in small enterprises most management tasks are 
carried out by the head of the enterprise himself. 
To achieve this, the Member States have introduced a very comprehensive 
set of measures. An initial attempt to compare these measures was made at 
the "Gateways to Growth" Conference organized in Birmingham on 29-
30 October 1992 on the initiative of the British Presidency. The main 
impression which emerged at this Conference was that while there were an 
impressive number of individual measures existing, in line with the 
diversity of the situations encountered on the ground, these measures had a 
rather low profile because they were not linked to macro-economic 
priorities. 
Several recent initiatives by certain Member States have attempted to 
remedy this situation. For example, at the beginning of 1994 the French 
Government adopted a law on "Initiative and the Private Enterprise". At the 
same time, the British Government published its draft Deregulation and 
Contracting-out Bill and recently published a White Paper on 
Competitiveness^) including a number of initiatives aimed specifically at 
SMEs in respect of training, education and innovation. Spain has recently 
introduced a programme supporting SMEs. Similar initiatives are being 
discussed in Germany, Denmark, Italy and the Netherlands. 
(1) UK White Paper on "Competitiveness - Helping Business to Win" 24 May 1994. Cm. 2563. 
At a Community level, the initiatives announced in 1992 as part of the 
growth initiative resulted in the conclusions of the Edinburgh European 
Council. The Community action programme on enterprise policy adopted 
on 14 June 1993 was built around this thinking, its main objective being the 
participation of SMEs in the Internal Market. Consequently, the 
Community instruments developed as part of this multiannual programme 
of measures are aimed principally at facilitating the "Europeanization" of 
enterprises. 
This priority remains totally valid in terms of the "growth objective". 
However, in addition to the "growth priority" there is the "employment 
priority", and most measures affecting the job creation potential of SMEs 
continue to be of national origin. 
To date, the Community has confined itself to supporting these national 
measures through its structural policies^2). A Commission study<3) on work 
in this field has revealed that Member States have not taken sufficient 
advantage of the facilities provided for developing SMEs. It is this situation 
that the SME Community Initiative and other Community initiatives such 
as "ADAPT" are trying to remedy. 
However, because the Community Initiatives necessarily concentrate their 
activities for SMEs in less developed regions, particularly Objective 1, they 
do not exploit the full potential for employment creation offered by SMEs. 
In addition as the choices to be made are decentralized, Community 
Initiatives do not alone ensure coherent actions notably in respect of the 
White Paper guidelines, neither can they on their own guarantee their 
visibility. To achieve this, it is necessary to attain a "mass" or "overall 
effect" when implementing an enterprise policy at all levels which requires 
above all the positive commitment of the Member States, the regions and 
all parties involved in SME development, these being the principal levers 
for action on enterprise policy. The Integrated Programme for SMEs and 
the craft sector will introduce a comprehensive framework of 
interdependent measures, which by their concerted nature, will contribute 
significantly to increasing employment. 
(2) Commission Report on the Coordination of Activities in Favour of SMEs 1994. 
(3 ) Use of the Structural Funds by SMEs, February 1993. 
THE INTEGRATED PROGRAMME; A NEW APPROACH 
6. The present Integrated Programme for SMEs and the craft sector puts into 
concrete form the objectives outlined in the White PaperC4) both in the short 
term, (identifying and alleviating the constraints of a tax, social security, 
administrative, financial or other nature that hamper the establishment or 
continued operation of SMEs), and the medium term, (supporting 
cooperation between enterprises, improving the quality of management, 
supporting the development of firms with a high growth potential, and 
supporting the employment growth in service SMEs). The Programme will 
assemble these various initiatives, existing and new, into a global 
framework to ensure their coherence and visibility. It proposes a closer 
partnership between all parties concerned with the development of SMEs -
at Community, national and regional levels - with a view to enhancing the 
convergence of these measures. 
The main innovation in the approach adopted is to urge the Member States, 
and all those involved in the development of SMEs, to ensure that their 
measures in support of SMEs fit in with current economic and political 
objectives, thereby giving them a higher profile and making them more 
coherent, without necessarily changing the underlying legal basis. The 
European Union should encourage such a development by providing a 
suitable framework for concerted action and ensuring that the Community 
instruments based on various provisions of the Treaty form part of the 
mechanism of such a programme. 
The Integrated Programme therefore provides for two different types of 
measure: 
a) measures to promote mutual consultation between Member States 
and joint coordination wherever necessary in order to: 
improve the enterprise environment through administrative 
simplification so as to relieve the burdens on enterprises and 
free their job-creation potential; 
(4) White Paper, pages 90 to 92. 
stimulate the enterprise support measures which exist at 
national or regional level; 
b) identification of the contributions which the Community plans to 
make towards the development of enterprise , both in their legal and 
fiscal environment, and in more direct support measures through the 
policies it conducts under various provisions of the Treaty. 
It is important to underline the fact that the links between these latter 
measures and enterprise policy arise primarily from the horizontal nature of 
this policy. The procedures for adopting and implementing these measures 
vary. Their inclusion in an Integrated Programme therefore has no legal 
basis but derives rather from their political character in the light of the 
current economic and political climate. Thus, for example, in the area of 
Structural Funds, the political dialogue with the Member States on the 
operational programmes can serve to strike a balance between decentralized 
choices and the need for macro-economic targeting. This will increase the 
coherence and visibility of the measures supported by the Community -
provided these objectives cannot be more effectively attained using the 
global grants mechanism, which allows direct communication with the 
intermediaries dealing with the enterprises. 
The aim of the Integrated Programme, which will not require any extra 
budgetary provision, is designed to integrate a set of Community measures 
into a concerted approach to match activities conducted at the micro-
economic level with the macro-economic policies of the White Paper. This 
is the only approach likely to create the overall panoply of measures 
necessary, or "masse critique", to support and develop employment 
creation. 
With regard to the proposed targeting, many studies and research projects 
demonstrate the vital importance to operators making employment 
decisions of a reduction in the legal, administrative and fiscal burdens on 
enterprises. It is also necessary to capitalize on the efforts made in all the 
Member States both to maintain existing jobs and to create new jobs 
through the numerous SME support programmes. 
As certain national statistics prove, employment can be stabilized using 
various enterprise support measures^5), which, by timely application during 
the three particularly vulnerable phases of the life of enterprises - creation, 
transfer, growth - can significantly reduce the rate of closures. Also, the 
right choice of instruments makes it possible to offer close support in 
particular to those enterprises with the desire to achieve growth. 
The Integrated Programme is not intended to substitute for various actions 
taken at a national or Community level, nor to interfere in the decision 
making process of the different actions. Within the context of a "charter for 
employment", it will above all mobilize actions and orient them in the most 
effective way by the identification and exchange of best practice, and by 
highlighting and raising the visibility and the profile of these actions taken 
for the benefit of enterprise. Respecting the principle of subsidiarity, the 
European Union will limit its role to that of a catalyst if it is not able to 
contribute directly by its own actions in order to achieve the common 
objective. The Commission believes nevertheless that this could be done 
through a concerted action rather than a purely national one because SME 
policy is seen as part of general economic policy within the framework of 
the Economic and Monetary Union. 
The Integrated Programme proposed below will focus on demonstrating the 
benefits to be gained by such a policy approach. After a brief presentation 
of the existing framework in chapter I, chapter II sets out the new measures. 
In Part A it proposes a set of concerted actions; in Part B, it describes the 
contributions which the European Union will be able to make through 
policies and measures based on the various articles of the Treaty. The 
synoptic table on page 8 sets out the Integrated Programme. 
(5) For example the Community's Business Innovation Centres (BICs) have played a role in the 
creation of enterprises and of employment since the launch of the pilot project in 1984 up until 
31 December 1992, when 2,726 innovative enterprises have created 15,953 direct jobs. The 
interaction of different enterprise policy instruments, which are horizontal by nature, will allow 
the BICs to increase their contribution towards the panoply of measures available for SMEs. 
8 
INTEGRATED PROGRAMME IN FAVOUR OF SMEs 
1.1. CONCERTED ACTION . 
Objective : SME Environment Contents Financing 
Improving the administrative environment New measure : 
° Group on Administrative Simplification 
1.2. CONCERTED ACTION "" -^ 
Objective : Support Measures for SMEs Contents Financing 
Stimulating measures in favour of SMEs New measures : 
° Forum on services to assist enterprises 
" Stimulating demand 
2.1, COMMUNITY CONTRIBUTIONS . 
Objective : SME Environment Contents Financing 
Improving the administrative environment Measures being taken : 
° Business impact assessment system SME Multiannuai Programme 
- New measure : SME Multiannuai Programme 
° Cost benefit analyses 
Improving the legal and fiscal environment New measures : 
° Examine existing legislation SME Multiannuai Programme 
° Transmission of entreprises SME Multiannuai Programme 
° Fiscal environment SME Multiannuai Programme 
° Late payments SME Multiannuai Programme 
" Local Services SME Multiannuai Programme 
2.2. COMMUNITY CONTRIBUTIONS . ' 
Objective : Support Measures for SMEs Contents Financing 
Improving access to finance and credit Measures being taken : 
° SME access to financial instruments : SME Multiannuai Programme 
i.e. venture capital, mutual guarantee 
schemes, secondary markets 
New measures : 
° capital markets SME Multiannuai Programme 
° private capital for RTD 4th Framework Programme RTD 
° New financial engineering instruments SME Initiative 
0 Round Table : analysis and follow up EIB + EIF + SME Initiative 
° Improving intervention measures of Structural Funds and EIB Global 
Community instruments Loans 
Cooperation Measures being taken : 
° Partner search networks SME Multiannuai Programme 
(BC-NET.BRE) 
° Direct partnership : Europartenariat, SME Multiannuai Programme 
INTERPRISE 
° Sub-contracting : market transparency and SME Multiannuai Programme 
pilot projects 
New Measures : 
° Support after initial partnership contact SME Multiannuai Programme (crafts 
pilot project) + SME Initiative 
° enterprise networks SME Initiative 
° production and distribution networks SME Initiative 
° sub-contracting : trade shows, promotion 
centres, networks, quality strategy SME Multiannuai Programme + SME 
• Initiative 
Management Quality, adapting SMEs to Measures being taken : 
structural changes and to the Internal " support pilot project, similar to SME Multiannuai Programme 
M k t EUROMANAGEMENT 
° Small entreprises, craft, retail, social SME Multiannuai Programme 
economy 
° Creators and young entrepreneurs SME Multiannuai Programme 
New Measures : 
° intermediaries potential for assistance SME Initiative 
° support for SMEs with growth potential SME Multiannuai Programme + SME 
(stimulate pilot projects) Initiative 
° assistance for managers and for workers SME Initiative + ADAPT 
threatened with industrial change 
° Training LEONARDO Programme 
Other actions Measures being taken : 
D Development and improvement of EIC SME Multiannuai Programme 
network 
New Measures : 
° Improved access to RTD 4° Framework Programme RTD 
- ° Information Society and SMEs SME Initiative 
Principal Sources of Finance 
Multiannuai Programme for SMEs 1993-1996: Ecu 112.2 million 
Community Initiative for SMEs 1994-1999: Ecu 1 billion 
Objective 4 : ADAPT Initiative 1994-1999: various projects for SMEs within Ecu 1.4 billion allocation 
Structural Funds 1994-1999: Community Support Framework and other Community Initiatives 
4th Framework Programme RTD-1995-1999: various projects for SMEs within Ecu 12.3 billion allocation 
EIB Global Loans: Ecu 1 billion for SME competitiveness 
Interest rates (2%): Ecu 45 million for 1994 - Ecu 22,75 million for 1995 
EIF: Ecu 2 billion for loan guarantees with future possibility of direct participation. 
FROM THE FIRST TO THE SECOND GENERATION OF ENTERPRISE 
POLICV 
1. THE EXISTING FRAMEWORK 
1. A panoply of Community measures in favour of SMEs already exists in 
different Community policies. 
The multiannuai programme in favour of enterprises was adopted on 14 
June 1993(6) on the basis of the Commission Memorandum "The Enterprise 
Dimension Essential to European Growth" which followed on from the 
Edinburgh Council "Growth Initiative". The multiannuai programme was 
devised to facilitate SMEs' participation in the Internal Market in order to 
liberate their growth potential. 
This programme aims to reinforce the priority axes and consolidate 
enterprise policy in order to encourage the Europeanisation and 
internationalisation of enterprises, particularly SMEs<7). 
Thus in respect of the enterprises' access to Community information, the 
network of 210 Euro-Info Centres, situated throughput the European Union, 
is being reinforced and developed to meet the current needs of SMEs. The 
EIC network is moving progressively towards more specialized help and 
counselling so that SMEs can fully benefit from the opportunities offered 
by the Internal Market, and to facilitate their participation in Community 
programmes (for example research, public procurement and best 
environmental practice). The cooperation networks for enterprises - BC -
NET and BRE, help facilitate partner search for business cooperation (e.g. 
in technology, financing or marketing). An evaluation and a report for 
future action will be presented by the Commission on these different 
networks during the first half of 1995. The INTERPRISE and 
EUROPARTENARIAT programmes, as well as the measures in support of 
transnational sub-contracting, all encourage partnerships between 
enterprises. In addition to these information and cooperation networks, pilot 
actions have been undertaken, such as EUROMANAGEMENT and the 
seed capital project. 
(6) Council Decision 93/379/EEC, OJ. L 161 of 02.07.1993. 
(7) 4th Commission Report on Enterprise Policy for 1993. May 1994. 
10 
The EUROMANAGEMENT method involves using specialized consultants 
to undertake audits and advise the enterprises in fields such as research and 
technological development, or in standardization, certification, and health 
and safety in the work place. The pilot project for seed capital launched in 
1989 to facilitate the provision of equity capital for start-ups, enabled the 
creation of 24 funds investing ECU 20 million, which helped the 
establishment of 187 new enterprises with the creation of over 1,700 new 
jobs. 
In addition, within the framework of the European Union's financial 
instruments, the Structural Funds form the major part of the Community's 
support for SMEs through cofmancing with the objective of ensuring 
economic and social cohesion, as well as global loans from the EIB. 
Finally, other Community programmes, such as those for research and 
technological development, vocational training, cooperation with third 
countries, or in respect of environmental policy, include measures which 
benefit SMEs<8). 
2. Acceleration of activity within the last 18 months by the European 
Institutions which leads from the first to the second generation of 
enterprise policy. 
At the launching of the Edinburgh Growth Initiative in December 1992, 
the European Council attached particular importance to measures in support 
of SMEs. Recognizing their contribution to employment and growth, it 
1 urged the Member States to stimulate private investment, particularly by 
SMEs; it proposed the setting-up of a European Investment Fund (EIF) and 
asked the Council and the Commission to ensure that the burden on SMEs 
from Community legislation^9) be reduced and that full information be 
provided regarding the Community support measures in their favour. 
Finally, it asked the Commission to speed up those measures in support of 
SMEs which had proved successful at the Community level. 
In June 1993, the Copenhagen European Council decided to increase the 
EIB temporary loan facility adopted in Edinburgh by ECU 3,000 million, of 
which ECU 1,000 million - together with interest rate subsidies - were to be 
directed towards strengthening the competitiveness of European small and 
medium-sized enterprises. 
(8) Commission Report on the Coordination of Activities in Favour of SMEs 1994. 
(9) See also Council Resolution of 8 June 1993 about the Quality of Drafting of Community 
Legislation. O.J. C 166 of 17.06.1993, page 1. 
11 
In November 1993, the Belgian Presidency submitted to the Council a 
Memorandum entitled "SMEs: Driving Force of European Growth", which 
resulted in the adoption of the Council Resolution of 22 November 1993 
on strengthening the competitiveness of enterprises, in particular of 
small and medium-sized enterprises and craft enterprises, and 
developing employment^10). This Resolution underlined the need for closer 
partnership between all the parties involved in the development of SMEs -
at Community, national and regional level - in order to enhance 
convergence between these measures. It therefore paved the way for a 
"second generation" of enterprise policy and requested the Commission to 
examine at the earliest possible opportunity proposals for an Integrated 
Programme for SMEs and craft enterprises. 
At the end of 1993, in the White Paper on Growth, Competitiveness and 
Employment, the Commission adopted this idea and outlined the need to 
examine concrete proposals for achieving an Integrated Programme for 
SMEs so as to enhance the effectiveness, coherence and visibility of 
measures to assist SMEs, through greater partnerships between all 
interested parties. 
Lastly, the European Council in its conclusions of 10/11 December 1993, 
declared that there was a need to "mobilize to a greater extent than hitherto 
the job-creation potential available within small and medium-sized 
enterprises". It emphasized also the need to encourage moves towards a 
decentralized economy, particularly by creating a fiscal, administrative and 
financial environment favourable to small and medium-sized enterprises, 
"which constitute one of the most dynamic factors in the European 
economy". 
This vigorous political commitment has already resulted in several 
practical measures. 
With regard to the problems of financing for SMEs, the Council of 19 April 
1994(H) t0ok a formal decision to introduce EIB low interest loans. The 
General Assembly for the creation of the European Investment Fund is 
planned for 14 June 1994. 
The Round Table of Leading Representatives from the Banking Sector 
submitted its final report on 19 May 1994: this contains recommendations 
addressed to the financial institutions, small and medium-sized enterprises, 
the Member States and the European Union(12). 
(10) OJC326, 03.12.1993 
(11) Council Decision 94/217/EG OJ EC L 107/57 of 28.04.1994. 
(12) See Press Communication n° IP (94) 417 of 19.05.1994. 
12 
This Round Table of Leading Representatives from the Banking Sector was 
set up in 1993 by Commissioner Vanni d'Archirafi to consider the specific 
financing difficulties facing SMEs and the solutions which might be 
envisaged by the financial institutions in a spirit of economic efficiency and 
partnership with the SMEs. The Round Table examined the most successful 
practices in the Community, including ways of improving relations between 
banks and SMEs, and considered how the SMEs could best profit from the 
Community's financial instruments. 
In February 1994, the Commission also decided to launch a Community 
Initiative to assist SMEs within the framework of the Structural Funds. 
This new Community initiative, with financing of ECU 1,000 million, aims 
to help small and medium-sized enterprises, mainly those in Objective 1 
regions, take advantage of the impetus of the Internal Market. Faced with 
the challenge of "growth, competitiveness and employment" these 
enterprises are the least well placed to benefit from the globalized 
economy. Consequently, they need assistance to overcome the complexity 
of the administrative and legal environment, to innovate, to adopt the most 
up-to-date management practices, to develop a strategic approach and to 
improve their access to finance and credit. 
The Community Initiative goes some way towards meeting the Council 
request of 11 November 1993 and is in keeping with the White Paper 
guidelines on SME policy, the main aspects of which were approved by the 
European Council at its meeting in Brussels on 10/11 December 1993. 
As set out in the White Paper, the ADAPT Community Initiative, is aimed 
at implementing a major transnational action programme linked to the new 
Objective 4 of the Structural Funds. With ECU 1.4 billion allocated to this 
initiative ADAPT has four interrelated objectives. These should; help to 
assist workers threatened with industrial change; help enterprises increase 
their competitiveness in manufacturing, services and the retail sector; 
prevent unemployment by improving the workforce's qualifications; and 
facilitate the development of new jobs and new activities. This new 
Community Initiative is largely oriented towards the needs of SMEs, and 
aims to complement the SME Initiative by a better utilisation of human 
resources and to improve the quality of management in business. The 
Commission will shortly adopt a definitive version of the Community 
Initiatives which will include the texts to be published in the Official 
Journal. The LEONARDO Programme will help by putting into effect a 
new Community programme in respect of vocational training. 
13 
In addition, and in the same spirit, the recent adoption of the 4th 
Framework Programme for Technological Research and Development 
will allow new procedures to be put into place. This will help SMEs 
participate in specific Community RTD programmes, in particular 
cooperative research actions inspired by the CRAFT project, and also new 
measures including logistical and financial support for SMEs. 
However it is recognized that the various initiatives, although 
complementary to each other, are often carried out in isolation with then-
own rationale and eligibility criteria, without necessarily taking an overall 
approach. Greater coordination of these measures would help to realize the 
full growth and employment potential of SMEs. There is a need to adopt an 
integrated approach, in order to achieve, within an overall framework, 
better coherence and visibility. The Council Resolution of 22 November 
1993 provided the starting point to launch these new actions. That is why 
the Integrated Programme proposes launching new types of actions -
actions concerted with the Member States, (because enterprise policy is 
largely conducted at the national level) in order to reach an overall 
approach and greater convergence, which with the European Union 
contributions, are designed to meet the objectives of the White Paper. 
14 
IL NEW MEASURES 
A. CONCERTED ACTIONS 
1. COORDINATION INITIATIVE TO SIMPLIFY THE ENVIRONMENT 
FOR ENTERPRISES 
Current Situation 
Regulation may impose costs on business, which could risk damaging their 
competitiveness and reduces the resources available for investment and the 
potential for creating jobs. The costs for small and medium-sized enterprises are 
sometimes disproportionately high, and they are least able to spare the managerial 
resources to ensure proper compliance with all the regulations and administrative 
procedures to which they are subject. The cumulative burden of regulations 
emanating from different sources is a particular problem for SMEs. Mimmizing 
the burdens for enterprises is particularly important now, in the context of the 
Internal Market, where enterprises, particularly the smaller enterprises, are 
struggling to come to terms with a different market place, the need to review their 
marketing strategies, and to be competitive in third-country markets. 
The best way of supporting enterprises' capacity to generate and retain jobs is to 
develop a legal and administrative environment conducive to enterprise creation 
and growth. 
In Article 130(1), the Treaty expressly recognizes the importance of this objective. 
In accordance with the Council Resolution of 3 December 1992 on administrative 
simplification, the Commission has in the past to some extent acted as a 
coordinator, monitoring the progress of administrative simplification both at 
Community and Member State leveK13). This was the subject of extensive debate 
at the Gateways to Growth Conference organized in Birmingham on 29/30 
October under the United Kingdom Presidency. 
More recently, several Member States (Belgium, France, Germany, the United 
Kingdom) have given a new impetus to their activity in this vital field. In view of 
the economic climate it would be highly desirable that the other Member States 
should follow their example. 
(13) Second Report on Administrative Simplification in the Community - SEC (92) 1867, 
27.10.1992. 
15 
Proposal 
One of the best ways of attaining this objective would be for Member States to 
engage in concerted action in this field, with the Commission contributing through 
its own administrative simplification efforts at the Community level. This 
concerted action would cover both administrative formalities or procedures as well 
as regulations (e.g. in respect of tax, administrative, social, environmental or 
consumer policies) which affect the way in which enterprises operate. 
The aim of such concerted action would be to create a framework for consultation 
and discussion in order to raise the political profile of administrative simplification 
to the macro-economic level. This would be a guarantee against the risk of 
bureaucratic inertia. Within this framework, the Member States would keep each 
other mutually informed of their priorities for exarnining existing legislation which 
hinders the creation or development of enterprises and the penetration of new 
fields of activity, particularly services. They would exchange information on 
experiences and best practice tested successfully in one or other Member State so 
as to derive the most benefit from them, whilst fully respecting their autonomy of 
decision. 
The Commission is convinced that in so doing the Member States could provide 
mutual support in carrying out a task which is as important as it is complex. An 
analysis of the impact of legislation or administrative procedures on the 
development of enterprises is a large exercise which is of interest to all business 
not just SMEs. However, SMEs represent 99.9% of all enterprises and do not have 
the resources to deal with the complexity of the legal and administrative 
environment. Taking into account the needs of SMEs in respect of the requirement 
for simplification will benefit all business. 
It is a fact that the majority of legislation, and the burdens imposed on enterprise, 
continue to emanate from the Member States. However, the European Union will 
be able to assist with this work in areas where Community legislation has an 
impact on the business environment and where there is a consensus between 
Community institutions on the need for greater simplicity so as to reduce the 
burden on enterprises (see chapter B, paragraph 1.1). In addition, the national 
transposition of Community directives sometimes adds extra burdens for 
enterprises beyond the objectives contained in the directive. 
16 
The Commission considers that the setting up of a Group composed particularly of 
representatives from organisations in Member States who have responsibility, or a 
coordinating role, in respect of administrative simplification, will permit a more 
appropriate overall framework for such concerted action. In consulting high level 
representatives from business this Group would help to raise its profile and enable 
it to better understand the problems faced by SMEs. On the basis of this Group's 
work, the Commission will submit a report to the Council which would help to 
maintain the necessary political pressure. The Commission hopes for the full 
support of the Council in this initiative which will be most important in order to 
ensure that the work of the Group has the necessary political commitment and is 
effective. 
2. CONCERTED ACTION ON SUPPORT INITIATIVES FOR 
ENTERPRISES 
Current Situation 
An impressive array of measures exist in all the Member States to support 
enterprises, both at the time of their .start-up and at other particularly difficult 
phases of their development, such as transfer. Such measures may be of national, 
regional or local origin. They have often evolved in an insufficiently coordinated 
way and suffer, owing to their very multiplicity and fragmentation, from a certain 
lack of visibility and attractiveness. Discouraged by the difficulties of obtaining 
information on the available support measures, or by the complexity of the 
application procedures, enterprises tend to ignore them or question the ability of 
any outside body to assist them. 
By way of example, information available on support measures for enterprise 
start-ups highlights two groups of Member States, the first with about 35 
measures, the second with up to 60. In a publication dated December 1993, 
"Growth for French SMEs", the "Enterprise and Progress" organisation advocated 
"a public relations campaign targeting SMEs to inform them in simple language of 
the various useful measures which existed and which were still unknown to most 
SME managers". 
17 
However, it is a fact that good support measures for enterprises greatly increase 
their chances of surviving and expanding. For example, it is acknowledged that the 
level and type of initial training for the creator of an enterprise, and the existence 
or otherwise of external advisory services, greatly influence the probability of an 
enterprise closing down or surviving. According to a 1990 survey of 16,000 
French enterprises created in 1984/85, the closure rate within five years was 59% 
in the case of new enterprises which had not used advisory services, compared 
with 19% for those who had consulted experts. Similarly, in the case of financing, 
the ability of an enterprise to prepare a comprehensive financial plan greatly 
facilitates its access to sources of finance, which are often under utilized. 
In its Resolution of 22 November 1993, the Council therefore requested the 
Commission and the Member States to "strengthen, within the framework of 
enlarged partnerships, the effectiveness, coherence and visibility of measures to 
assist SMEs while also taking into account the strategic dimension of the size of 
the enterprises". 
Similarly, the White Paper on Growth, Competitiveness and Employment 
presented by the Commission to the European Council on 10/11 December 1993, 
suggested that there was "a need to foster, in cooperation with the Member States 
and the Chambers of Commerce and Industry, a demand for information, training 
and advice in order to overcome specific obstacles to the survival of businesses, 
which could be significantly improved by appropriate advice". To do this, "the 
potential existing among business intermediaries should be exploited to the full. In 
this connection, the Community could also look into the scope for improving the 
supply of direct advice to firms on the various aspects of their day-to-day 
management". 
In line with the priority accorded by the White Paper to improving the 
management capability in SMEs, the Community Initiative Programme will enable 
the Community to provide financial support to national advisory and assistance 
projects for SMEs, aimed particularly at defining strategies for modernisation, 
introducing total quality control systems, working out proposals to promote 
cooperation, access to research, participation in public procurement contracts, or 
in vocational training. 
Proposal 
a) Discussion forum on services to assist enterprises 
While it is clear that it is mainly the Member States (and in some cases other 
parties within these countries) which are responsible for drawing up measures to 
assist SMEs, it would undoubtedly be of great benefit if the Member States were 
to engage in mutual consultation on ways of improving the effectiveness of their 
actions. There has been no systematic attempt to make a comparative analysis of 
best practice at Community level. The reason for this is the extremely large 
number of initiatives at very different levels, where the various procedures are as 
much a reflection of administrative structures as of the situation of enterprises in 
the various Member States. 
The method proposed is to create one or several panels where Member States 
could present and compare what they consider to be their "best practice" as 
regards SME support measures in the key phases of creation, growth and transfer. 
In this context, growth support measures are of particular interest in that they are 
likely to contribute to increasing employment rather than simply stabilizing it. In 
view of thé fact that only a small percentage of enterprises (5% to 6%) have the 
ambition to grow, comparisons of measures relying on the spontaneous emergence 
of such enterprises and forming part ôf a growth policy would be the most useful. 
For its part, the Commission would contribute through some of its pilot projects 
which have proved successful in this field (e.g. Euromanagement RDT and Plato). 
In the context of "best practice", the measures facilitating SMEs access to sources 
of finance should also be examined such as those tested within the seed capital 
pilot project, since this is a crucial factor in each of the development phases of an 
enterprise. 
Another particularly relevant topic is the improvement of productivity in service 
enterprises, which are among the most important sources of employment and 
growth. If the discussion forum shows that a coherent approach does not exist, it 
will be necessary to consider defining a common approach for any necessary 
strategy, in order to respond to this important objective for international and 
European competitiveness. 
19 
Lastly, such exchanges of experience should cover a better knowledge of markets, 
which is required increasingly by enterprises in order to take advantage of the 
Internal Market. Among these new markets that of the environment presents 
opportunities for business including SMEs. SMEs could in particular be 
encouraged to follow the example of those who have already adapted their 
business strategy to meet environmental regulations and to the demand for more 
environmentally friendly products. 
Such exchanges would enable the Member States, while identifying best practice, 
to also identify any gaps in their assistance measures. 
This discussion framework could take the form of one or several conferences 
organized by the Commission, which would be responsible for reporting on them 
to the Council. In the case of regional support measures the Committee of the 
Regions would be well placed to organize such conferences. 
The creation of one or several discussion panels would greatly benefit from the 
positive support of the Council. 
b) Concerted action to encourage greater use by enterprises of information, 
training and advisory services 
Recent position papers on enterprise policy have underlined the lack of visibility 
of the support measures for enterprises mentioned above which results from the 
great proliferation of programmes in the European Union, inevitable because of 
the wide diversity in the Member States themselves^14). These papers clearly show 
the need for targetted arid systematic action demonstrating the added value of 
concerted action at the European Union level which would significantly increase 
the effectiveness of measures to be taken in the area of communication with 
enterprises. These include: 
firstly, greater visibility through a better targeted and more transparent 
presentation ("repackaging") of the services available at the three critical 
phases in the life of an enterprise. Indeed, in order to facilitate the 
promotion of these services it would be better to present the whole range of 
services topic by topic and in an understandable form for SMEs; 
(14) See the European Initiative for the Improvement of Innovation and Investment Capacity for 
SMEs and the Promotion of the Creation of Enterprises by the GemeinschaftsausschuB der 
Deutschen gewerblichen Wirtschaft, May 1994, particularly paragraph 5; and "SMEs in the 
United Kingdom", research undertaken by the Economic and Social Research Council with the 
help of the Department of Trade and Industry. 
20 
secondly, to initiate action to stimulate demand to overcome the weakness 
of communication between the entrepreneur and the different organisations 
offering services, and to improve the response time of the services 
provided. 
In putting together the idea of this single message at the European Union level, 
together with the need to decentralize its distribution so that it reaches all levels of 
business, an extensive communication operation could be undertaken without the 
need for extra finance. In order to do this it will be necessary to work together 
with all those concerned in partnership organized at the European Union level, but 
relying on voluntary contributions from all business support organisations. 
Such an initiative would benefit from a political consensus on the part of Member 
States and the active participation of the main intermediaries providing services to 
enterprises. Moreover, the procedures in respect of information and publicity 
relating to the use of the Structural Funds^15) encourage the promotion of actions 
undertaken including those within the Community Initiatives. 
B. COMMUNITY CONTRIBUTIONS 
The Integrated Programme is based on a concept of creating a synergy and 
increased partnership between all parties with a role to play in developing SMEs. 
In the first part of the Integrated Programme, emphasis has been placed on 
consultation between Member States, insofar as the latter control the main 
instruments for exploiting the growth and employment potential of SMEs. 
Nonetheless, the Community has a variety of legal and fiscal instruments at its 
disposal to influence the business environment of enterprises and related services. 
These instruments are derived not only from the June 1993 multiannuai 
programme of measures to assist enterprises, but also on Community policies 
based on the various provisions of the Treaty. The intention is to insert the various 
actions within the framework of the Integrated Programme. 
(15) Commission Decision n° C(94)1351 on information and publicity measures to be undertaken by 
the Member States in relation to interventions of the Structural Funds and the FIFG. 
21 
1. IMPROVING THE ENVIRONMENT FOR ENTERPRISES . 
1.1. Consideration of enterprises' needs when compiling Community legislation 
Current Situation 
The Commission is continuing its efforts to improve and strengthen its system for 
evaluating Community legislation (see declaration on relative costs under 
Commission proposals)^16). Where a Commission proposal for legislation is likely 
to have a significant impact on business, the Directorate General responsible has 
to complete an impact assessment. 
The compliance costs and other administrative burdens therefore have to be 
weighed against the potential benefits usually in terms of essential protection, for 
example to health and safety or environmental controls. 
At the time of the negotiations leading up to the Treaty on European Union in 
Maastricht there was considerable discussion about Community legislation and the 
decision-making process which leads up to legislative proposals being agreed by 
the Commission. These discussions were conducted against the background of 
Member States' concern for the principle of subsidiarity, particularly in respect of 
the proportionality concept for legislation. In order to put into effect the 
declaration annexed to the Treaty on European Union, the Commission is 
considering new guidelines for regulatory policy to include a possible 
methodology for analysing the costs and benefits of proposed legislation. In 
addition the Commission is undertaking an audit of existing Community 
legislation referred to by the Brussels European Council of 11 and 12 December 
1993. 
Proposal 
On the basis of the work carried out in respect of legislative policy and of an 
evaluation of the current implementation of the business impact assessment 
system, the Commission will adjust and strengthen its internal working procedures 
on the evaluation of the effects and impact of its legislative proposals, to include 
the consideration of cost-effectiveness or cost-benefit analysis. This will help to 
prepare a more comprehensive business impact assessment, with particular 
reference to SMEs, which will be part of the documentation to be considered by 
the Commission, and subsequently the Council, Parliament and the Economic and 
Social Committee. 
In respect of existing legislation the Commission will propose codification each 
time it is necessary in order to simplify the application of Community law, and 
will make the necessary proposals to take into account the experience gained from 
the implementation of secondary legislation. 
(16) Annex to the Treaty on European Union, page 230. 
22 
1.2. Improving the conditions for the transfer of enterprises 
Current Situation 
While it is true today that SMEs play an important role in creating growth and 
jobs, which is recognized by the Commission and the Member States, the fact 
remains that thousands of SMEs disappear every year because they have not been 
able to overcome difficulties linked to their transfer. Thus, it is estimated that 
almost 10% of business closures in the European Union have their origin in a 
badly administered estate, calling into question at least 30,000 enterprises and 
300,000 jobs per year. This closure rate is seen in all the Member States and the 
problem will become increasingly acute in the future, since the generation of post­
war entrepreneurs is now reaching retirement age. It is therefore necessary to 
adopt measures to facilitate the transfer of enterprises and consequently to 
safeguard the fabric of SMEs and protect employment. 
The Commission invited experts from all the Member States to a symposium held 
in Brussels on 29 and 30 January 1993. It emerged that transfer problems lie partly 
in the legal framework for enterprises, which is not very favourable to 
partnerships, and does not allow the flexibility which is available to incorporated 
businesses. For its part, the law on succession has scarcely changed for decades 
and is not suited to current needs, particularly when the enterprise has not adopted 
corporate status. On top of these problems there is a very heavy tax burden which 
substantially undermines the enterprise's assets. The experts confirmed the need 
for Community measures to facilitate transfer and proposed a series of concrete 
measures on which the Commission plans to take action with the following 
proposals. 
Proposal 
Advisory services for entrepreneurs are vital to make them consider and define a 
transfer strategy. This will be encouraged as part of the concerted action between 
Member States on services to enterprises (see A.2. above). 
However, such services are not sufficient to ensure successful transfers, given the 
continued existence of legal and fiscal obstacles within the national laws. This is 
why it is highly desirable that the legal and fiscal environment for SMEs is 
improved at the same time. The Commission therefore plans to facilitate the 
circulation of various countries' best practice, without imposing binding 
procedures on Member States. 
23 
The Commission will launch a wide consultation of all interested parties covering 
a certain number of issues aiming to provide enterprises with a more favçurable 
legal and fiscal environment for their transfer which: 
facilitates the continued operation of a sole proprietorship or partnership in 
the event of the death of the head of the enterprise or one of the partners; 
facilitates in particular, with a view to transfer, the change from sole 
proprietorship or partnership to corporate status, based on a joint 
examination of the most appropriate procedure; 
facilitates the adoption by SMEs of public limited-liability status by 
reducing the administrative formalities and the cost of access to this status, 
in a manner which is compatible with the protection of partners and third 
party interests; 
reduces the fiscal burden on legatees who continue to operate the 
enterprise. 
After this consultation the Commission will address a Recommendation to the 
Member .States aimed at eliminating the main obstacles to successful transfer by 
the introduction, throughout the European Union, of initiatives which have 
hitherto remained fragmentary at Member State level. The implementation of such 
a Recommendation by the Member States would help to ensure the continuity of 
enterprises and the jobs they provide. 
The problem of the double taxation of estates which can arise when the deceased, 
the heir and the assets are situated in different Member States of the European 
Union, will also be the subject of a consultation in order to see whether the 
Commission should adopt a Recommendation or propose other appropriate 
actions. 
1.3. Improving the fiscal environment for SMEs 
Current Situation 
Generally speaking, SMEs find it more difficult than large enterprises to obtain 
adequate financing for their investments. To make the most of the growth and 
employment potential of SMEs, it is vital to improve their ability to raise finance 
from their own resources while taking other initiatives regarding access to external 
sources of finance (see 2.1. below). 
24 
It is a fact that current taxation rules governing SMEs are likely, in some 
circumstances, to hamper their ability to raise finance from their own resources, 
depending on whether or not they have corporate status. Thus, owing to their legal 
status, sole traders and partnerships, in the absence of a distinction between 
distributed income and reinvested income, are often taxed on their entire income at 
marginal income tax rates, which can be higher than the tax rates applying to 
corporations. Consequently, in such a situation, owing to their heavier tax burden, 
sole traders and partnerships have less ability to raise finance from their own 
resources than corporations of a similar size. In 1992 the Ruding Committee of 
Experts on Corporation Tax drew the attention of the Commission and the Council 
to this problem. 
Discussions have taken place to remedy this situation; this may involve either 
reducing the fiscal charges applied to the non-distributed portion of income for 
sole proprietorships and partnerships on the basis of rules to be left to the choice 
of Member States, and by giving those enterprises the right to opt for transfer into 
incorporated businesses. 
Furthermore, SME financing conditions would be improved by tax changes for 
investors, and in particular venture capital funds, which eliminated the double 
taxation likely to arise in the financing chain. 
In addition to its role in financing SME investments, taxation can also influence, 
or indeed hamper, enterprises' development owing to the diversity of tax systems 
in the Community. For this reason SMEs often refrain from expanding their 
activities in other Member States through permanent establishments, fearing an 
excessive increase in administrative charges arising from the need to comply with 
other tax laws. The Commission is therefore examining the possibility of applying 
the tax legislation of the Member State of the enterprises' head office to permanent 
establishments in other Member States during the start-up phase. 
Proposal 
As announced in the Strategic Programme for the Internal Market, the 
Commission has submitted in parallel a Communication to the Member States on 
improving the fiscal environment for SMEs, aimed at reducing obstacles to their 
development and thereby improving their job creation potential. This 
Communication is complemented by a Recommendation concerning the way 
businesses are subject to taxation. 
25 
In respect of indirect taxation, a certain number of measures have been taken to 
reduce the administrative charges arising out of the transitory VAT regime^17). In 
addition the Commission will be making proposals before the end of the year in 
order to revise the VAT system. 
1.4. Improving payment periods between enterprises 
Current Situation 
The trend observed in recent years towards a growing number of increasingly late 
payments is causing serious concern in business circles. A survey published 
recently by a major firm of auditors confirmed this trend, with 65% of European 
enterprises interviewed of the opinion that the situation had deteriorated in 1993. 
Some enterprises regard the systematic use of payment delays as sound financial 
practice. The excessive lengthening of payment periods is very damaging to 
enterprises, particularly small and medium-sized enterprises. By increasing their 
financial and administrative burdens, such delays undermine the entire economic 
fabric and endanger the survival of many enterprises. 
In 1993, the Commission entered into extensive consultations with all interested 
parties on the basis of a Working Document18). It received the comments of the 
European Parliament, the Economic and Social Committee as well as from more 
than 130 professional and business organisations. A public hearing on the issue 
took place in Brussels on 7/8 July 1993. It emerged from these consultations that 
there was very strong support for Community initiatives, given the extent to which 
payment difficulties are seen as an obstacle to the development of enterprises -
and particularly SMEs - and to the efficient working of the Internal Market. 
The Round Table of Leading Representatives from the Banking Sector (mentioned 
in the introduction) considered that "inter-enterprise credit" was one of the key 
problems of SME financing. It recommended that the Member States adopt 
measures aimed at encouraging, even imposing, adherence to payment periods and 
at developing appropriate financial instruments accessible to SMEs. 
(17) Council Directive 92/111/EEC of 14.12.1992, O.J. L 384 of 30.12.1992, p. 47, Commission 
proposal for a Directive of 09.03.1994, COM(94)58 final, O.J. 107 of 15.04.1994, p. 7. 
(18) SEC(92)2214, 18.11.1992. 
26 
In its Strategic Programme for the Internal Market, the Commission announced 
that related proposals would be presented in the second quarter of 1994. In the 
same way the Commission will also examine the question of transfrontier 
payments in respect of their costs and the delays which are a financial burden for 
business. 
It emerged clearly from the consultation: 
that the problem of late payments, in particular transfrontier payments, has 
an obvious impact on the proper functioning of the Internal Market. 
that the nature of the problems and the possible solutions differed 
depending on whether the problem was one of longer contractual payment 
periods or of payment delays, the latter having priority; 
that certain disciplinary rules should be applied to states' authorities; 
that a "package" of different measures - both legal and practical - might 
improve the situation. 
Proposals 
In view of these comments and of all the suggestions made during the 
consultations, the Commission initially plans to address a Recommendation to the 
Member States. 
The Recommendation will mainly aim to improve the current legal framework 
since this was not considered sufficiently dissuasive for bad payers. It will deal 
specifically with the right to interest on overdue payments, appeal procedures for 
non-contested claims, and to improving payment discipline on the part of public 
authorities. Choosing this non-binding legal instrument should allow Member 
States to adopt the measures most suited to their specific legal framework and 
commercial practices. However, if the Recommendation were to have no effect, 
the Commission reserves the right to make more binding proposals. 
Regarding the specific difficulties to crossborder trade the Commission will 
examine the scope for promoting joint action by the Member States under the third 
pillar of the Maastricht Treaty (legal cooperation) in order to speed up the 
procedures for obtaining an injunction for non-contested claims. 
27 
The Commission will also adopt measures to alert the business organizations and 
intermediaries to their role in informing and training SMEs in the field of financial 
management and payment periods. These same organizations will be encouraged 
to promote, for example through professional agreements, standards which are 
recognized and respected in this field. 
7.5. Facilitate an environment favourable to the creation of new employment 
in local services 
Current Situation 
Within the context of the White Paper the Commission is working on ideas for 
creating new jobs particularly in areas not so far exploited, such as local services 
or protection of the environment. 
Proposals 
The Commission will identify models for such service activities (like voucher 
schemes, e.g. "cheque service") and will eventually support their diffusion. The 
objective is to analyse ways to support the development of such service activities 
without conflicting with the interests of existing enterprises. A synthesis report 
will be presented to the Essen European Council in December 1994. 
2. SUPPORT MEASURES FOR ENTERPRISES 
Supporting the development and adjustment of SMEs is a vital aspect of 
ensuring the full effectiveness of the Internal Market and an adequate level of 
competitiveness for enterprises. 
To do this various measures will be made available at a Community level beyond 
the SME multiannuai programme 1993-96 already mentioned in chapter I. These 
are: 
a Structural Fund measures in particular the SME Community Initiative, 
principally in objective 1 regions, aimed at helping enterprises to handle the 
administrative and legal environment successfully, to embrace innovation 
and modernization, and to give preference to the latest management 
methods as part of a strategic approach; other Community Initiatives will be 
put into effect with Structural Funds support, in particular training actions 
oriented towards employment; to this effect the ADAPT Initiative, helping 
adjustment to industrial change could benefit many SMEs; 
28 
b measures implementing the Fourth RTD Framework Programme recently 
approved by the Council and the European Parliament. This programme 
recognizes the role and needs of SMEs in the field of research and 
technological innovation and favours their participation in Community 
RTD programmes and stimulates the diffusion of the results of research in 
SMEs by encouraging the transfer of know-how through increased 
assistance at the preparatory stage of the research project*19); 
c in the implementation of the LEONARDO training programme project 
presented by the Commission on 22 December 1993 which was welcomed 
by the Parliament on 4 May 1994 and which will shortly lead to a common 
position in the Council. Promoting the support of access to continuing 
vocational training linked to broader based initial training is a necessary 
condition to improve the skills of workers and support the competitiveness 
of SMEs; 
d work is in hand to put into effect the information Society. In this context 
the spread of new technologies is still not wide enough to provide SMEs 
with all the information which they need to improve their management 
capability. It is therefore necessary to take action to allow SMEs' access 
into advanced telematic services, such as electronic mail, video 
conferencing, and electronic data interchange (EDI). Through the 
information autoroutes it will be possible to access, in real time, networks 
dealing with accounting, financial institutions, marketing and training. The 
Community information and cooperation networks already in place as part 
of enterprise policy will play a part in these developments. As the work on 
developing the information Society evolves the Commission will take 
appropriate initiatives for SMEs. 
The support measures must meet in particular the three major objectives already 
set out in the White Paper: 
improving access to financing and credit; 
supporting cooperation between firms; 
improving management quality. 
(19) For example MINT (Managing the Integration of New Technologies) launched within the 
SPRINT programme. MINT envisages SMEs having the opportunity to use new technologies by 
the use of consultants specialized in the management of innovation, notably a technology audit, 
including quality, design, and an analysis of the value of transnational technical cooperation 
between enterprises. Following on from the audit within the context of MINT the SMEs will be 
encouraged towards support measures at the national, regional or Community level most 
appropriate to their needs. 
29 
2.1. Improving access to finance and credit 
Current Situation-
The European Union has introduced several financial instruments which can 
benefit SMEs. Apart from the support to enterprises under various Community 
programmes (for example in research, training or financial engineering), these 
consist mainly of actions financed by the Community Structural Funds and global 
loans from the European Investment Bank (EIB). 
These instruments are undoubtedly of great value to enterprises. However, studies 
show that their potential could be better exploited by SMEs. 
Also, new initiatives were taken in this field at the Edinburgh and Copenhagen 
European summits. On the one hand, the decision was taken to create a European 
Investment Fund (EIF) with a capital of ECU 2,000 million, which can provide 
guarantees for loans to SMEs and trans-European networks. Secondly, a special 
tranche of EIB loans amounting to ECU 1,000 million was earmarked for SMEs, 
combined with interest rate subsidies. How the procedures for implementing these 
instruments are defined will be decisive in determining their value to SMEs. 
In addition the Report from the Round Table of Leading Representatives from the 
Banking Sector and SMEs in particular insists that an important part of the EIF 
funds must be reserved for financing SMEs. The EIF must act in as flexible 
manner as possible. It must be able to support the guarantee systems existing in 
the Member States. As for interest rates on EIB loans the Round Table 
recommends a flexible approach towards applying die employment criterion. It 
emphasizes that the 2% interest rate benefit should be passed on entirely to the 
SMEs, and that the intermediaries used must be specialized in the financing of 
SMEs. The Round Table report, which will be published, also contains 
recommendations addressed to the Member States, to the banks, and to SMEs. 
Finally, the Community Initiative for SMEs approved by the Commission on 16 
February 1994 provides for the co-financing of national measures aimed at 
facilitating SME access to credit and finance, as provided for in Article lc of the 
FEDER Regulation^0) for all interventions within regional policy. 
(20) Council Regulation 2083/93 of 20 July 1993 concerning the European Regional Development 
Fund. O.J. L n° 193 of 31.07.1993, p. 34. 
30 
Measures 
The Commission will continue to support pilot projects under existing Community 
programmes where these projects aim to introduce new financial instruments (for 
example in the field of mutual guarantees and venture capital) or to improve the 
functioning of Commumty financial markets (for example by encouraging the 
development of capital markets aimed at promoting share holdings in SMEs). In 
addition within the framework of the Structural Funds, and in particular under the 
Community Initiative for SMEs, the Commission will encourage, on the basis of 
cofinancing, national support measures particularly in respect of access to risk 
capital for SMEs and other financial engineering instruments. 
Regarding the EIB global loans, the Commission attaches special importance to 
improving procedures for implementing these Community instruments to assist 
SME financing and combine this with Structural Funds cofinancing. In this 
context the choice of financial intermediaries would appear to be decisive. 
The Commission will examine the Round Table's recommendations in this respect 
and consider any necessary follow up. 
2.2. Supporting cooperation between enterprises 
Current Situation 
In view of the globalization and internationalization of manufacturing and trade, 
particularly in the less developed Community countries, there is a need to improve 
the competitiveness of SMEs by encouraging partnerships and alliances 
between European enterprises while respecting the Community's competition 
policy. This objective can be attained by implementing an array of measures in the 
following fields. 
Measures 
2.2A. The Community could henceforth step up its efforts to stimulate 
cooperation between enterprises by providing support beyond the first 
phase of partnership search. It has already taken action (in particular 
through BC-NET, BRE, Europartenariat, INTERPRISE, Sub-contracting 
projects and the SPRINT Network) aimed principally at helping with the 
search for partners and establishing the first contacts between 
entrepreneurs. However, very often, to follow up on the initial phases of a 
matching process it is necessary to be close to the enterprises (at a national 
or regional level) and to provide suitable backing over a certain period of 
time. 
31 
An initial pilot project is being developed in support of craft industries as 
part of the SME multiannuai programme. It should also be stressed that 
Community co-financing is among the measures of the SME Community 
Initiative selected to promote interregional and transnational cooperation 
between these enterprises by providing support beyond the first phase of 
seeking partners until the conclusion of the contractual relationship. 
2.2.2. There is room for an additional measure to support SME efforts to 
participate in enterprise networks, for example in order to introduce 
flexible and specialized production systems. The Community Initiative for 
SMEs has also considered the possibility of assisting in the development of 
enterprise networks, in particular by linking more advanced regions with 
less advanced regions thus contributing towards economic and social 
cohesion. 
Such ideas are reflected in the contributions made by various countries, in 
particular Austria, to the White Paper, and the Community could help to 
expand and propagate practices developed in particular Community 
regions. For example, the Danish government has backed the formation of 
small groups of enterprises to encourage them to work out common 
marketing, design and publicity strategies; similarly, in its northern 
provinces, the Netherlands has given backing to the formation of groups of 
SMEs as a way of helping these enterprises to adjust to the certification 
requirements imposed by the EN 29000 standard. 
2.2.3. In respect of the opening up of public procurement for SMEs it is still 
difficult to gain access because of administrative barriers and the necessity 
to find suitable partners in the Member States of the purchaser. Measures 
will be proposed in order to take advantage of the BC-NET and BRE 
networks with a view to creating partnerships between enterprises which 
can then respond more positively, either directly or through sub-contractors 
to the calls for tender. There will be improved notification about these calls 
for tender through the SIMAP project. (Information Systems on Public 
Procurement)^21). 
(21) Commission Communication to the Council, "Making the Most of the Internal Market" : 
Strategic Programme, COM(93)632 final of 22.12.1993, p. 39. 
32 
2.2.4. The successful grouping of small and medium-sized enterprises in 
production and distribution networks which are organized and compete 
at the Internal Market level should be encouraged, along the lines of the 
strategy underlying the "Commerce 2000" project^22). This will mean, for 
example, making it easier for retail SMEs to participate in purchasing 
networks with computerized logistics structures through the introduction of 
new information and management technologies and appropriate 
management systems. 
For example, if the Member States were to adopt some "Commerce 2000" 
pilot projects, co-financing could be arranged via the SME Community 
Initiative, more specifically under the telematics provision. 
2.2.5. Sub-contracting has become a key factor in the development of new inter-
industrial relations and is playing an increasingly important role in 
enterprise competitiveness. This activity is further magnified by the 
outsourcing policy pursued by the major groups, which concentrate on their 
principal activities and call on SMEs to take on a significant share of the 
design and production of components, and even of entire systems. 
These factors call for the adoption of a total quality strategy, of improved 
and modernized management systems and production facilities. 
Closer cooperation between principals and sub-contractors should also be 
encouraged. In this regard, the impact of "inverted trade shows", organised 
by the main contractors for their potential suppliers or sub-contractors, will 
be developed in the light of the initial results. 
In addition, cooperation between sub-contracting SMEs will be encouraged 
particularly in key areas such as the motor industry, so as to respond better 
to the significant changes affecting these sectors. 
In this context it will also be necessary to encourage the creation of sub­
contracting promotion centres to develop complementary areas of activity 
between economic regions. The multiannuai programme for SMEs as well 
as the Structural Funds would allow the cofinancing of such actions. 
(22) Commerce 2000 is a pilot action seeking to promote cooperation between SMEs by the use of 
modern management methods and new technologies in the retail and distribution sector (O.J. C 
277/93 of 15.10.1993, p. 14). 
33 
Community support for schemes to set up networks of sub-contracting 
enterprises can be particularly beneficial, in particular by helping small 
enterprises to meet the demands of the major contractors. In this way they 
will be helped significantly by working together on common projects, 
particularly those involving the quality, design or marketing approach. 
In addition main contractors are increasingly asking their sub-contractors to 
comply with strict quality controls. One of the major aims of the SME 
Community Initiative will be to improve SME production and 
organizational systems, both by introducing a strategy of total quality and 
through cooperation. 
2.3. Support for improving management quality 
Current Situation 
It is a fact that in SMEs most of the management functions are exercised by the 
head of the enterprise himself and that he does not always have the necessary 
qualifications. As a result an improvement in the skills of entrepreneurs, either at 
the start up phase of an enterprise, or to overcome structural weaknesses, is a 
crucial factor in supporting the competitivity of SMEs and their ability to retain 
jobs in the long term. 
Measures 
2.3.1. The effectiveness of measures already launched in this field would be 
greatly improved if coordinated action was taken by all the intermediaries 
to emphasize a certain number of key issues, thereby alerting the SME 
manager to the changes necessary in his role. 
To this end, it is necessary to mobilize all the existing potential among 
enterprises' intermediaries. In this context, the Community could also 
examine the scope for improving the available advisory services which deal 
with various aspects of day-to-day management, as well as the usefulness 
of a European standard defining the quality criteria for consultants who 
hope to participate in Community programmes. 
The Community SME Initiative is mainly geared to non-tangible 
investments and will be able to actively support efforts to ensure that the 
managers of enterprises are adequately trained. 
34 
2.3.2. Another specific measure is to provide backing for enterprises wishing to 
enter a growth phase. External expertise is vital in such cases, given the 
significant implications in terms, of organization and industrial and financial 
management. Such enterprises should be identified through a mainly 
voluntary scheme and then be given support in their modernization and 
innovation efforts. 
The EUROMANAGEMENT project adopted by the Commission involves 
action by specialized consultants within a sample of enterprises wishing to 
engage in transnational technological cooperation. A central coordinator 
develops the audit methodology and monitors and ensures the quality 
control of the consultants' work, in cooperation with the Commission. Such 
quality control makes it possible to confer on those enterprises taking part 
in such audits the recognition that they are capable of participating in 
national or Community RDT programmes. 
A similar project has been developed to deal specifically with quality and 
certification questions and could be developed in the field of the 
environment. 
Certain pilot projects promoted by the Commission - such as the PLATO 
programme developed in Belgium, which makes use of enterprise synergy 
to promote growth - could also be used successfully at a national level to 
identify those enterprises with the ambition to grow and to back up their 
efforts through assistance and sponsorship activities in which the large 
enterprises could participate. 
The Commumty Initiative to assist SMEs is particularly well placed to back 
up the efforts of SMEs with an ambition to adopt a growth strategy 
combining management quality and production quality, in conjunction with 
a series of measures to assist SMEs under other Community support 
programmes. Where Member States include in their proposals such actions, 
the European Union could support them, either as part of operational 
programmes or via global grants to assist qualified intermediaries, while 
still retaining the role of coordinator and organiser of networks aiming at 
transnational cooperation. 
35 
CONCLUSIONS 
This Integrated Programme for SMEs and the craft sector pulls together various 
initiatives into a global framework to ensure their coherence and their visibility, 
and proposes a closer partnership between all parties concerned with the 
development of SMEs - at Community, national and regional levels - with a 
view to enhancing the convergence of these measures. In terms of specific 
concrete measures to help achieve the objectives of the White Paper, the 
implementation of the Integrated Programme will encourage a return to growth 
and competitiveness while improving the employment situation. To this end, the 
Community will make every effort to stimulate, innovate, and supplement the 
range of existing measures in a new form of partnership. 
This-partnership calls for close, concerted action by the Community, the national 
authorities and all intermediaries, whether they be employers' federations, 
professional associations or Chambers of Commerce and Industry, to realize this 
common objective, namely the mobilization of SMEs as a major source of job 
creation. 
All available means must be used in order to ensure the success of an Integrated 
Programme which relies as much on concerted initiatives - taken jointly by the 
Member States to strengthen the coherence of measures in support of SMEs - as 
on the effectiveness of Community contributions and actions, without the need to 
add to budgetary provisions. 
COMMUNICATION FROM THE COMMISSION CONCERNING 
IMPLEMENTATION OF AN INTEGRATED PROGRAMME 
IN SUPPORT OF SMEs 
FINANCIAL STATEMENT 
1 TITLE OF OPERATION 
Integrated programme in support of SMEs. 
2 BUDGET HEADING INVOLVED 
See point 7.2 below. 
3 LEGAL BASIS 
Treaty on European Union, in particular Article 130. 
4 DESCRIPTION OF OPERATION 
4.1 Specific objectives 
The European Union attaches high priority to improving competitiveness and 
creating employment. Since SMEs have emerged as the main potential source of 
employment in the 1990s, and since they face a number of obstacles to realizing 
their employment-creating potential to the full, the European Institutions are fully 
committed to the specific measures benefiting SMEs which have been developed 
over the last eighteen months. 
The purpose of the Integrated Programme is therefore to initiate in a concerted 
manner the set of measures described below, giving due regard to financial 
constraints, and to place activities carried out at micro-economic level in the 
macro-economic context of the White Paper. 
- 1 
'< L 
The Integrated Programme will therefore have to contribute to achieving the aims 
set out in the White Paper, both in the short term (identifying and reducing 
obstacles of a fiscal, social, administrative and financial nature and other 
obstacles to the creation or safeguarding of SMEs, and improving the financing of 
enterprises) and in the medium term (supporting cooperation between enterprises, 
improving the quality of management, supporting the, development of emerprises 
with a high growth potential and promoting employment by SMEs in the service 
sector). 
In order to achieve these objectives, the Integrated Programme provides for two 
types of action, as part of a close partnership between all parties concerned in the 
development of SMEs: 
A) Measures facilitating reciprocal consultation between the Member States and, 
where necessary, coordination between Member States with a view to: 
improving the business environment by simplifying administrative procedures, 
thus reducing the burden on. enterprises and unlocking their potential for 
creating employment; 
promoting support measures for enterprises operating at national or regional 
level; 
B) identification of ways in which the Community can contribute to the 
development of enterprises, both in terms of the legal and fiscal environments, 
and of more direct support in the foim of policies and measures to be 
implemented under the provisions of the Treaty. 
Basically, the measures which are proposed will be taken pursuant to the following 
Decisions and Resolutions: 
- the Initiative on Growth and the proposal by the Edinburgh European Council in 
December 1992 to create a European Investment Fund (EIF); 
- Council Decision of 14 June 1993 on a multiannuai programme in support of SMEs; 
- the decision of the Copenhagen European Council to increase the funds available 
under the EIB temporaty loan mechanism adopted in Edinburgh; 
- Council Resolution of 22 November 1993 on strengthening the competitiveness of 
enterprises, in particular of small and medium-sized enterprises and craft enterprises, 
and developing employment; 
- the White Paper on Growth, Competitiveness and Employment presented by the 
Commission at the end of 1993; 
-the conclusions reached by the European Council in Brussels on 10 and 11 December 
1993; and 
- a number of measures implementing the above, most notably: 
- the decision to grant low-interest loans by the EIB; 
- Commission Decision of February 1994 on the launch of a Community initiative 
benefiting SMEs, and the ADAPT initiative, which is geared primarily to the needs of 
SMEs. 
1 5 
4.2 Period covered: 1994-1999. 
4.3 Target population 
Member States, regional and local authorities, enterprises (in particular, 
SMEs), consular authorities, etc. 
5 CLASSIFICATION OF EXPENDITURE OR REVENUE 
5.1 Compulsory/Non-compulsory expenditure 
5.2 Differentiated/Non-differentiated appropriations 
5.3 Type of revenue involved: Not applicable. 
6 TYPE OF EXPENDITURE OR REVENUE 
The types of expenditure are appropriate to each of the measures described in point 
7.2. 
7 FINANCIAL IMPACT 
7.1 Method of calculating total cost of operation (definition of unit costs) 
Tliis integrated programme will have no new budgetary impact. 
7.2 Itemised breakdown of cost 
This Integrated Programme will have no additional budgetary impact and will be 
implemented under the budgetary planning for the period 1993-99. The Programme 
also involves more direct support measures, to be implemented pursuant to the 
provisions of the Treaty. The most important of these measures are set out below, 
together with a statement of the approximate amounts provided for in the Decisions and 
the budgetary planning for 1993-99: 
Multiannuai programme for SMEs 1993-96: ECU 112.2 million. 
Community Initiative for SMEs 1994-99: ECU 1 billion. 
ADAPT Initiative 1994-99: various projects for SMEs within the ECU 1.4 billion 
global allocation. 
EIB global loans: ECU 1 billion for SME competitiveness. 
Interest-rate subsidies (2%): ECU 45 million for 1994 and ECU 22. 75 million for 
1995. 
EIF: ECU 2 billion in the form of guarantee capital, followed by direct holdings. 
R&TD framework programme 1995-99: Numerous objectives concerning SMEs 
involving specific programmes and the funds for their implementation. 
Structural funds 1994-99: Numerous objectives concerning SMEs in the context of 
Community Support Frameworks, (CSFs) and operational programmes. 
7.3 Operational expenditure (studies, meetings of experts, etc. included in 
Part B) Not applicable. 
7.4 Indicative schedule of appropriations: Not applicable. 
8 FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 
Anti-fraud provisions are incorporated in each of the measures described in point 7.2. 
9 ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1 Specific and quantified objectives: target population 
The Integrated Programme in support of SMEs, which is designed to bring various 
initiatives together in a global framework, is an essential ingredient for 
strengthening the coherence and visibility of those intitiatives. In order to increase 
the convergence of these measures, it is proposed that a close partnership be 
created between all parties concerned at Community, national and regional level, 
a partnership which will not have any additional financial impact. 
9.2 Grounds for the operation 
In view of the aims described in point 4, it should be pointed out that the 
Integrated Programme is not intended to replace the various measures being taken 
at national or Community level, nor to interfere in the decision-making processes 
relating to those measures. Rather, the intention is to mobilise the contributions of 
each of them, and to increase their effectiveness by identifying best practices and 
promoting their more widespread adoption, and by enhancing the visibility and 
profile of measures in support of the enterprises in question. 
- Cost: Not applicable. 
- Benefits: 
Given greater cohesion between measures taken by the various parties, the 
Integrated Programme should make it possible for SMEs in particular to 
confront the challenges facing them and overcome the obstacles to growth 
and competitiveness, and to increase SMEs ' potential - already considerable 
-for creating employment. 
9.3 Monitoring and evaluation of the operation 
Regular evaluation is planned in a manner appropriate to each of the 
measures described in point 7.2. 
4-
ISSN 0254-1475 
COM (94) 207 final 
DOCUMENTS 
EN 08 
Catalogue number : CB-CO-94-223-EN-C 
ISBN 92-11-69211A 
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