COMMUNICATION FROM THE COMMISSION An action plan to improve access to finance for SMEs
Date: 2011-12-07
Institutions: European Commission
Subjects: EU financing, action programme, aid to undertakings, company growth, corporate finance, investment, small and medium-sized enterprises

EUROPEAN COMMISSION 

Brussels, 7.12.2011 
COM(2011) 870 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, TO THE 
EUROPEAN PARLIAMENT, TO THE COMMITTEE OF THE REGIONS, AND TO 
THE EUROPEAN AND SOCIAL COMMITTEE 

An action plan to improve access to finance for SMEs 

{SEC(2011) 1527 final} 

 
 
 
 
  
 
1. 

SMES – DRIVERS OF GROWTH 

Europe's  economic  success  depends  largely  on  the  growth  of  Small  and  Medium 
sized Enterprises (SMEs) achieving their potential. SMEs contribute more than half 
of the total value added in the non-financial business economy and provided 80% of 
all new jobs in Europe in the past five years.1  

SMEs often face significant difficulties in obtaining the financing they need in order 
to grow and innovate.  

One  of  the  key  priorities  set  out  in  Europe  2020,  the  EU's  growth  strategy  for  the 
coming  decade,  as  well  as  in  the  Commission's  Single  Market  Act2 and  the  Small 
Business  Act 3  is  to  facilitate  access  to  finance  for  SMEs.  The  Annual  Growth 
Survey 4 has  underlined  the  crucial  role  of  a  healthy  financial  system  to  support 
growth and set out priorities for action in the short-term perspective. 

In  this  context  the  reform  programme  for  financial  services,  implemented  as  a 
response  to  the  financial  crisis,  can  bring  about  regulatory  benefits  to  SMEs.  In 
addition, the Commission is proposing to release new targeted funding at EU level to 
address the key market failures that limit the growth of SMEs.  

The  Commission  is  presenting  in  this  Action  Plan  the  various  policies  that  it  is 
pursuing  to  make  access  to  finance  easier  for  Europe's  23  million  SMEs  and  to 
provide a significant contribution to growth.5  

2. 

RESPONDING TO THE PROBLEMS  

Difficulties in accessing finance are one of the main obstacles obstructing the growth 
of  SMEs,  as  presented  in  the  annex  in  more  detail.6 There  are  multiple  causes  for 
such  obstacles,  some  cyclical7,  some  structural.  Information  asymmetries  between 
the suppliers and demanders of funds play a major role.  

SMEs are to a very large extent dependent on bank loans for their external financing, 
therefore suitable alternatives should be put at their disposal.  

The  Commission  will  use  regulation  to  make  SMEs  more  visible  to  investors  and 
markets more attractive and accessible for SMEs. Regulatory changes will keep the 
right  balance  between  prudential  regulation  and  financing  of  SMEs,  and  between 
investor protection and tailored measures for SMEs.  

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Structural Business Statistics (Eurostat)  
http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/data/database 
COM 2011 206 
COM (2011) 78 
COM (2011) 815 final 
Future initiatives following this Action Plan will be prepared carefully and include appropriate impact 
assessments where relevant. 
ECB, Survey on the Access to Finances of SMEs, February 2010 
EIM, Cyclicality of SME Finance, March 2009 

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Secondly,  the  Commission  intends  to  continue  using  the  EU  budget  to  facilitate 
access  to  finance  for  SMEs  to  address  the  key  market  failures  (i.e.  information 
asymmetries  and  fragmentation  of  venture  capital  market)  that  limit  the  growth  of 
SMEs.  EU  intervention  must  have  a  clear  added  value  complementing  financial 
resources  available  at  national  level  and  mobilise  additional  finance  (presence  of  a 
"financial multiplier effect")8.  

Thirdly,  the  Commission  will  use  its  coordinating  role,  working  in  particular  with 
Member  States,  to  exchange  best  practices  and  develop  synergies  between  actions 
taken at the national and EU levels.  

While  most  of  the  measures  will  have  a  medium  to  long  term  horizon,  it  is  also 
important to stress that Europe is already taking a number  of steps  to  address  the 
immediate difficulties. 

The main objective is to stabilise the economic and financial situation. At the end of 
October,  the  Heads  of  State  and  Government  agreed  on  a  comprehensive  set  of 
measures to address the current tensions in financial markets whilst also safeguarding 
the flow of credit to the real economy and avoid excessive deleveraging.  

More specifically for  SMEs,  Europe has  been providing a balanced mix of  flexible 
financial  instruments  under  the current programme period (2007-2013), essential in 
addressing  the  diverse  financing  needs  of  SMEs.  The  financial  instruments  of  the 
Competitiveness and Innovation Framework Programme (CIP) with a budget of €1.1 
billion  should  enable  financial  institutions  to  provide  about  €30  billion  of  new 
finance9 for more than 315 000 SMEs. In 2008-2011, the European Investment Bank 
(EIB) provided around €40 billio n of lending for SMEs, which benefitted more than 
210 000 SMEs. 

In the field of Cohesion Policy the Commission already adopted measures to provide 
investments  for  SMEs  in  15  Member  States  through  financial  engineering 
instruments  designed  by  structural  funds.  These  measures  have  been  further 
reinforced allowing investments in SMEs in all Member States at any stage of their 
normal business activity and represent thus an important alternative financial source 
to  gain  access  to  credit.  Assistance  to enterprises  provided  through  equity 
investments, guarantees and loans is estimated to amount to at least €3 billi on in the 
current financial period. 

Finally,  in  order  to  provide  better  access  to  loan  finance  a  specific  Risk  Sharing 
Instrument (RSI) is being created under the EU's Seventh Framework Programme for 
Research  (FP7)  Risk-Sharing  Finance  Facility  as  of  2012.  The  RSI  will  provide 
partial guarantees to financial intermediaries through a risk-sharing mechanism, thus 
reducing their financial risks encouraging them to provide lending between €25 000 
and  €7.5  million  to  SMEs  undertaking  re search,  development  or  innovation 
activities.  

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The actions are consistent with the present and future financial framework. Any envisage action in this 
action plan is coherent with the proposal for both the Programme for the Competitiveness of Enterprises 
and SMEs and for the Horizon 2020 Programme. The cost for the agencies and the European Enterprise 
Network  will  be  covered  by  allocations  already  foreseen  in  the  official  programming  of  the 
Commission. 
i.e. for every Euro invested through CIP, about €30 are finally obtained by the beneficiary  

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3. 

REGULATORY MEASURES 

3.1. 

Improving the regulatory framework for venture capital  

3.1.1.  A new legislation on venture capital 

Venture capital funds are operators that provide mostly equity finance to companies 
that are generally very small, in the initial stages of their corporate development. In 
the  EU,  venture  capital  funding  has  high,  but  largely  unexploited,  potential  for 
development of SMEs. Despite the huge size of the asset management industry in the 
EU, no specific provisions in current EU legislation have been designed to channel 
equity  funds  to  SMEs.  Venture  capital  funds  managers  can  rarely  benefit  from  the 
passport  that  has  been  introduced  in  the  Directive  on  Alternative  Investment  Fund 
Managers  (AIFM),  because  its  threshold  of  €500  million  is  higher  than  the  size  of 
most EU venture capital funds’ portfolios.  

The Commission10 is therefore proposing a new European venture capital regime that 
will enable EU venture capital funds to market their funds and raise capital on a pan-
European basis across the Single Market. The new regime will reduce fragmentation 
of  the  venture  capital  markets  along  national  lines  that  prevent  cross-border 
operations and limit the supply of venture capital. 

The  new  framework  will  be  simple  and  efficient,  with  a  single  registration  in  the 
home  Member  State,  and  with  simplified  reporting  obligations,  and  adapted 
organisation and conduct of business rules.  

Once in place this framework should increase the scale of the VC market and lead to: 
(i)  larger,  more  efficient  VC  funds,  with  more  possibilities  to  specialise  by  type  of 
investments;  (ii)  increased  competition  between  funds  and  better  diversification  of 
their investments; and (iii) more cross-border financing available for SMEs. 

Together with this Action Plan, the Commission is presenting a new EU venture 
capital  framework  creating  a  genuine  internal  market  for  VC  funds.  The 
Commission  invites  the  Parliament  and  the  Council  to  adopt  this  legislative 
proposal by June 2012. 

3.1.2.  Regulatory framework for investment in venture capital  

Institutional  investors,  in  particular  insurance  companies,  but  also  to  some  extent 
banks, are potential investors in VC funds. In some Member States, they are already 
significant investors today.  

The  new  prudential  frameworks  for  insurance  (Solvency  II11)  and  banks  (Capital 
Requirements  Regulation  and  Directive12)  have  given  rise  to  concerns  that  it  could 

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The Commission 2007 proposal of mutual recognition of venture capital funds, although backed by the 
Member States in 2008, has not reduced regulatory fragmentation along national lines. 
Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25 November  2009  on  the 
taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).  
On  20  July  2011,  the  Commission  adopted  a  legislative  package  to  strengthen  the  regulation  of  the 
banking  sector.  The  proposal  replaces  the  current  Capital  Requirements  Directives  (2006/48  and 
2006/49)  with  a  Directive  and  a  Regulation  and  constitutes  another  major  step  towards  creating  a 
sounder and safer financial system. The directive governs the access to deposit-taking activities while 

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discourage  investments  in  VC  funds,  treated  as  non  listed  investments  or  high  risk 
assets  (along  with  commodities  and  hedge  funds)  in  the  calculations  for  prudential 
requirements13.  

This treatment responds to prudential concerns. However a well-calibrated legislative 
framework  for  venture  capital,  that  recognises  in  particular  the  benefits  of 
diversification, may allow for a certain amount of VC investments in a way that does 
not cause prudential concerns.  

In  2012,  as  part  of  a  wider  reflection  on  long-term  investment,  on  the  basis  of 
technical work to be jointly done by the European Banking Authority and the 
European Insurance and Occupational Pensions Authority, the Commission will 
carry out a study on the relationship between prudential regulation and venture 
capital investments by banks and insurance companies.  

3.1.3.  Taxation reforms benefiting SMEs  

The  Commission  worked  together  with  national  and  industry  experts  on  ways  to 
remove regulatory and tax barriers to cross-border VC investments. . A group of tax 
experts14 has identified the main tax problems for cross-border VC investment which 
can lead, due to the lack of coherence between the 27 tax systems across the EU, to 
double taxation, tax treatment uncertainties and administrative obstacles.15 Although 
the  bilateral  double  taxation  conventions  between  Member  States  should  normally 
prevent  these  difficulties,  they  may  not  always  cater  for  the  complex  commercial 
structures used in VC investment.  

The European regime for venture capital will remove obstacles to cross-border fund-
raising  but  will  not  as  such  solve  the  taxation  problems  that  funds  invested  across 
borders face. However, a common notion of a venture capital fund would be a good 
starting point for further exploring with Member States solutions to the tax problems 
which may hinder the cross-border investments of such funds.  

In  2012,  the  Commission  will  complete  its  examination  of  the  tax  obstacles  to 
cross-border  venture  capital  investment  with  a  view  to  presenting  solutions  in 
2013  aimed  at  eliminating  the  obstacles  while  at  the  same  time  preventing  tax 
avoidance and evasion. 

3.2. 

State aid rules relevant for SME access to finance 

State aid policy can support SME access to finance in different ways, allowing aid to 
banks for reasons of financial stability, and providing guidance to Member States on 
how  to  design  aid  schemes  that  promote  the  Europe  2020  objectives  (R&D  and 

the regulation establishes the prudential requirements institutions need to respect. See COM(2011) 453 
final,  COM(2011)  452  final,  proposed  by  the  Commission  on  20  July  2011  and  currently  under 
negotiation in Council and Parliament.  
See for instance article 123 in the proposed Regulation on prudential requirements for credit institutions 
and investment firms, COM(2011) 452 final of 20.7.2011. 

http://ec.europa.eu/taxation_customs/resources/documents/taxation/company_tax/initiatives_small_busi
ness/venture_capital/tax_obstacles_venture_capital_en.pdf 
The diverging definitions of what constitutes a permanent establishment often oblige VC fund to set up 
subsidiaries and to face increased administrative and tax burden. 

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innovation, regional and social cohesion, etc.) and take account of the specific needs 
of SMEs.  

The  Risk  Capital  Guidelines 16 allow  supporting  early  stage  financing  for  SMEs, 
leveraging  private  capital  and  alleviating  market  failures.  The  Commission  has 
recognised a wider equity gap and increased the threshold for equity investment in a 
start  up  company  from  €1.5  million  to  €2.5  million.  The  State  aid  rules  allow 
intervention even beyond this threshold, in specific circumstances. 

By  2013  the  Commission  will  review  the  General  Block  Exemption  Regulation 
and  a  number  of  State  aid  guidelines,  including  on  Risk  Capital,  to  achieve 
Europe 2020 objectives and respond to SME needs.  

3.3. 

Improving SME access to capital markets 

In order to improve SME17 access to capital markets, the Commission is proposing a 
number  of  regulatory  changes  that  aim  at  improving  the  visibility  of  the  SME 
markets  and  reducing  wherever  possible  the  costs  and  the  regulatory  burden  for 
SMEs, while keeping an adequate level of investor protection.  

3.3.1.  More visible SME markets 

The Commission wants to facilitate the development of homogeneous SME growth 
markets  attractive  for  investors.  In  the  proposal  on  the  Directive  on  Markets  in 
Financial Instruments (MIFID)18, it has proposed to attribute the label SME growth 
market  to  those  Multilateral  Trading  Facilities  (MTFs)  that  would  respond  to  a 
common  set  of  characteristics.  The  aim  is  to  find  an  adequate  balance  between 
proportionate requirements for SMEs, and a high level of investor protection19.  

This label should allow these markets to gain more visibility, attracting investors and 
making  them  more  liquid.  The  label  would  be  voluntary  and  would  be  based  on 
requirements to be adopted by the Commission based on a proposal by the European 
Securities  Markets  Authority  (ESMA).  The  label  would  be  granted  by  national 
competent  authorities.  The  label  will  in  turn  allow  markets  to  develop  more 
standardised  tools  (indexes,  specialised  funds  investing  in  those  markets),  to  create 
networks between MTFs and to follow best practices.  

In  October  2011,  an  SME  growth  market  label  was  proposed  in  EU  capital 
markets  legislation  (MIFID).  The  Commission  invites  the  Parliament  and  the 
Council to adopt this legislative proposal as swiftly as possible. 

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Community  guidelines  on  state  aid  to  promote  risk  capital  investments  in  small  and  medium-sized 
enterprises, OJ C 194, 18.8.2006, p. 2–21.  
In the context of financial markets, SMEs include also firms with limited market capitalisation (below 
100 million EUR). 
Directive  on  markets  in  financial  instruments  repealing  Directive  2004/39/EC  of  the  European 
Parliament and of the Council, COM(2011) 656 final, adopted on 20.10.2011. 
The level of investor protection would be further strengthened by the proposed extension of the scope 
of application of the Market Abuse Directive to MTFs. 

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3.3.2.  More visible listed SMEs  

The  proposal  for  a  modification  of  the  Transparency  Directive20 aims  at  improving 
access to regulated information in Europe. Currently, access to financial information 
on  listed  companies  is  unnecessarily  difficult:  interested  parties  need  to  go  through 
27 different national databases in order to find this information.  

High quality comparable information widely available from a central access point at 
the EU level would facilitate a larger use of information on listed SMEs by investors. 
A  central  access  point  could  lower  barriers  and  entry  costs  for  new  commercial 
information  providers  that  may  wish  to  enter  the  market  to  address  the  gap  in  the 
provision of information on smaller companies. Equally, smaller issuers themselves 
may also be encouraged to invest in producing improved information and document 
formats targeted at cross border investors.  

The Commission, with the assistance of ESMA, will enhance the existing storage 
system  and  develop  a  single  access  point  to  regulated  information  at  EU  level. 
The  Commission  will  facilitate  access  to  high  quality  information  on  listed 
SMEs.  The  Commission  invites  the  Parliament  and  the  Council  to  adopt  this 
legislative proposal by end 2012. 

3.3.3.  Reducing reporting burdens for listed SMEs 

In  order  to  simplify  accounting  rules  for  SMEs  and  further  reduce  their 
administrative  burden,  the  Commission  adopted  a  proposal  for  a  Directive  on  the 
annual financial statements, consolidated financial statements and related reports of 
certain types of undertakings.21 This could allow SMEs to save up to €1.7 billion per 
year. Increased comparability of financial statements and a better focus on essential 
information  should  result  in  better  investment  decisions  and  a  better  allocation  of 
capital.  

The  Commission  is  also  proposing  to  reduce  requirements  and  costs  for  small 
issuers, notably eliminating quarterly reporting and through a wider use of templates 
prepared  by  ESMA,  which  would  facilitate  comparability  of  information  for 
investors.  The  lighter  regime  of  the  new  Transparency  Directive  will  apply  to  all 
issuers, and it will have a greater impact in terms of cost reduction on small issuers. 
Investor  protection  would  be  guaranteed  through  the  mandatory  disclosure  of  half-
yearly and yearly results, as well as through the disclosures required by the Market 
Abuse and Prospectus Directives. Companies would of course be free to continue to 
provide more information to investors.  

The  recent  amendment  to  the  Prospectus  Directive22 introduced  a  proportionate 
disclosure regime for SMEs and companies with limited market capitalisation. This 

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Directive  amending  Directive  2004/109/EC  on  the  harmonisation  of  transparency  requirements  in 
relation to information about issuers whose securities are admitted to trading on a regulated market and 
Commission Directive 2007/14/EC, COM(2011) 683 final, adopted on 25.10.2011. 
COM(2011) 684 final 
Directive 2010/73/EC, OJ L 327 of 11.12.2010 

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regime should limit the amount of disclosures and reduce administrative burdens for 
SMEs and small issuers, without prejudice to investor protection. 

In October 2011, a legislative proposal amending the Accounting Directives was 
presented in order to simplify and improve accounting rules for SMEs. 

At  the  same  time,  the  Commission  presented  a  proposal  revising  the 
Transparency  Directive  in  order  to  reduce  the  regulatory  burden  for  small 
issuers. 

The  Commission  invites  the  Parliament  and  the  Council  to  adopt  these 
legislative proposals by end 2012..  

By  July  2012,  delegated  acts  in  the  context  of  the  Prospectus  Directive  will  be 
proposed, specifying the content of a proportionate disclosure regime for SMEs 
and small issuers. 

3.4.  Reviewing the impact of bank capital requirements on SMEs  

The  existing  capital  framework  for  banks  developed  by  the  Basel  Committee  for 
Banking  Supervision  -  transposed  in  EU  law  via  two  adaptations  of  the  Capital 
Requirements Directive (the CRD III23 and the proposed CRD IV and CRR) - aims at 
strengthening  prudential  banking  rules.  In  addition  to  requiring  more  and  higher 
quality capital, it imposes higher capital charges for market activities and enhances 
rules on  the management of liquidity risk. This will provide for enhanced financial 
stability, more robust banking business models and stronger balance sheets.  

In  the  CRD  IV,  the  current  prudential  treatment  of  SME  loans  will  continue  to 
benefit  from  the  provisions  of  Basel  II  (a  preferential  risk  weight  for  SMEs 
exposures of 75% under the standardized approach). An even more beneficial regime 
for  exposures  to  SMEs  would  require  a  revision  of  the  international  Basel 
framework. It would especially require demonstrating that the current approach is too 
stringent.  This  is  why  the  risk  weight  for  SMEs  exposure  is  subject  to  a  review 
clause in the Commission's proposal.  

The Commission, consulting the European Banking Authority (EBA), will, within 24 
months after the entry into force of the new Regulation, report on lending to SMEs 
and  natural  persons.  It  will  submit  its  report  to  the  European  Parliament  and  the 
Council, together with any appropriate proposal concerning the review of the SMEs' 
risk  weight.  In  this  context,  the  EBA  is  requested  to  analyse  and  report  by  1 
September 2012 on the current risk weights, testing the possibilities for a reduction, 
taking  into  consideration  a  scenario  of  a  reduction  by  one  third  in  relation  to  the 
current situation. 

Based on the report from EBA and its recommendations, the Commission will 
consider appropriate measures addressing the issue of SMEs risk weighting in 
the context of the CRD IV and CRR framework. 

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Directive 2010/76/EU, already in force. 

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3.5. 

Accelerating the implementation of the Late Payments Directive 

Many  payments  in  commercial  transactions  between  businesses  or  between 
businesses and public authorities are made much later than agreed. This is costly for 
European businesses, amounting to some €  1.1 trillion in terms of delayed turnover.24 
Cash flow for SMEs is expected to be improved through reduced payment times as a 
result of the provisions of the revised Late Payments Directive.25 This could lead to 
reduced needs for short term external financing.  

The  Commission  strongly  encourages  Member  States  to  accelerate  the 
implementation  of  the  Late  Payments  Directive  in  advance  in  respect  of  the 
transposition deadline of March 2013. 

3.6 

An innovative regime for European Social Entrepreneurship Funds 
Social businesses are an emerging sector in the EU. They are undertakings whose 
primary objective is to achieve social impacts, rather than generate profits for 
shareholders or other stakeholders. 
Being socially innovative and often newly created businesses, they are mostly 
composed of a large population of SMEs, facing problems of access to finance similar 
to all small businesses. 

The Commission is presenting a new European Social Entrepreneurship Funds 
regime that will enable EU funds to specialise in this field and to be marketed 
across the EU under a specific and distinctive label. The Commission invites the 
EP and Council to adopt this new regulation before the end of 2012. 

4. 

EU FINANCIAL MEASURES FOR SMES  

The  Commission  has  proposed  a  number  of  new  financial  instruments  to  facilitate 
SMEs’  access  to  finance  also  in  the  future  (2014-2020).  It  is  important  to  ensure 
more simplicity and better coherence between the different EU funding schemes. The 
Commission  introduced  the  principles  of  debt  and  equity  platforms  that  will 
standardise  the  common  mechanics  of  the  instruments,  streamline  relations  with 
financing partners and foster administrative efficiency.26 Under the Cohesion Policy 
2014-2020  the  scope  of  the  financial  instruments  will  be  enhanced,  by  extending 
their  scope  and  by  rendering  their  implementation  frameworks  more  flexible  and 
effective.  

4.1.  Measures to improve lending to SMEs  

The  Commission  has  proposed  an  EU  Debt  Financial  Instrument  for  enterprises' 
growth and research and innovation, which will provide guarantees and other forms 
of  risk-sharing  to  improve  lending  to  SMEs,  including  research  and  innovation-
driven SMEs. 

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SEC(2009) 315 
Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating 
late payment in commercial transactions. It will have to be transposed into national law by 16 March 
2013 at the latest 
COM(2011)662  

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The financial instrument will be an integrated structure comprising different facilities 
with  specific  policy  objectives,  in  line  with  the  Commission  Communication  on  a 
"Framework  for  the  next  generation  of  innovative  financial  instruments  –  the  EU 
Equity  and  Debt  Platforms" 27 .  It  will  be  funded  by  the  Programme  for  the 
Competitiveness  of  Enterprises  and  small  and  medium-sized  enterprises    2014-
2020) 28 (COSME),    by  the  Horizon  2020 29 programme  and  the  Creative  Europe 
Programme.  

Through COSME30, the Commission will be providing enterprises and in particular 
SMEs with a Loan Guarantee Facility, which will offer guarantees for: 

(i) debt financing via loans, subordinated and participating loans or leasing to reduce 
the particular difficulties SMEs face in accessing finance for their growth; 

(ii) securitisation of SME debt finance portfolios, aimed at mobilising additional debt 
financing for SMEs. 

The Loan Guarantee Facility shall, except for loans in the securitised portfolio, cover 
loans up to €150 000 and with a minimum maturity of 12 months.  

Furthermore, the Commission will, through the Horizon 202031 programme, provide 
a  Debt  facility  with  an  SME  Window  to  support  research  and  innovation  (R&I)-
driven  SMEs.  The  SME  Window  will  target  R&I-driven  SMEs  with  loan  amounts 
that complement finance to SMEs by the Loan Guarantee Facility under the COSME 
Programme.  

Additionally, the Commission is also proposing to set up a guarantee facility aimed 
especially at those SMEs which are operating in the cultural and creative sectors. The 
facility will also be implemented under the EU debt Financial Instrument.  

Finally,  under  the  EU  Programme  for  Social  Change  and  Innovation,  the 
Commission  proposes  financial  support  to  microfinance  for  micro-enterprises  and 
financing for social enterprises. 

The  Commission  and  stakeholders  will  organise  workshops  with  Members  States 
that are still lagging behind in the use of EU financial instruments at the moment, in 
order  to  facilitate  institution-building  and  to  promote  the  use  of  the  EU  guarantees 
and venture capital.  

The  Commission  will  continue  enhancing  the  supply  of  loans  to  micro  enterprises 
and  promote  the  adoption  of  the  European  Code  of  Good  Conduct  for  Microcredit 
Provision. 

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COM(2011)662 
COM(2011)834/2  
COM(2011) 808 final 
The indicative budget for the debt and equity facilities under COSME is €1.4 billion. 
The indicative budget for the debt and equity facilities under Horizon 2020 is €3.8 billion. 

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The Commission has proposed: 

1. A reinforced and expanded EU Debt Financial Instrument to improve lending 
to SMEs, including R&I-driven SMEs. The Instrument encompasses a Loan 
Guarantee Facility under the COSME Programme (2014-2020) and an SME 
Window under Horizon 2020's Debt facility.  

The EU Debt Financial Instrument will also include a Cultural and Creative 
Sectors Facility financed under the Creative Europe Programme (2014-2020), to 
enhance access to finance for SMEs in the European cultural and creative 
sectors. 

2. Under the EU Programme for Social Change and Innovation (2014-2020), a 
specific  Microfinance  and  Social  Entrepreneurship  Axis  that  will  support 
notably  microfinance  for  micro-enterprises,  the  build  up  the  institutional 
capacity  of  microcredit  providers  and  financing  for  the  development  of  social 
enterprises; 

The  European  Investment  Bank  will  maintain  its  SME  loan  activity  at  a 
sustained pace close to the 2011 level, subject to market conditions and in line 
with its funding capacity. The EIB will continue to contribute to improving loan 
conditions, increasing flexibility and ensuring rapid allocation. EIB and EIF will 
continue developing synergies through risk-sharing operations, including for the 
securitisation  of  portfolio  of  SME  debt,  partly  in  cooperation  with  the 
Commission.  

4.2.  Measures to improve access to venture capital and other risk financing  

The  Commission  has  proposed  an  EU  Equity  Financial  Instrument  for  EU 
enterprises' growth and research and innovation, which will provide venture capital 
and mezzanine financing to enterprises from their early stage (including seed) to the 
growth stage.  

The financial instrument will be an integrated structure comprising different facilities 
with specific policy objectives, in line with the framework for the next generation of 
innovative  financial  instruments.  It  will  be    funded  by  the  Programme  for  the 
Competitiveness of Enterprises and SMEs (COSME) and by  Horizon 2020.  

COSME will include an Equity Facility covering enterprises in their expansion and 
growth-stages.  The  facility  will  also  have  the  possibility  to  make  early-stage 
investments in conjunction with the Horizon 2020 Programme. 

The Horizon 2020 Programme will include an equity facility targeting enterprises in 
their  early-stage.  The  facility  will  also  have  the  possibility  to  make  expansion  and 
growth-stage investments in conjunction with the COSME Programme.  

The EIB Group will continue supporting the growth of SMEs through its wide range 
of equity products and particularly the enlarged EIB Risk Capital Mandate. Further 
cooperation  between  the  EIB  Group  and  the  European  Commission,  including 

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through  risk-sharing  arrangements,  will  be  developed  in  order  to  facilitate  the 
mobilisation of additional public and private resources.  

The Commission has proposed: 

1.  A  reinforced  and  expanded  equity  financial  instrument  to  improve  SMEs' 
access  to  venture  capital  and  other  risk  financing,  from  their  early  stage 
(including  seed)  to  their  growth  stage.  The  equity  financial  instrument  will  be 
funded  by  the  Programme  for  the  Competitiveness  of  Enterprises  and  SMEs 
and by Horizon 2020.  

2.  The  establishment  of  funds-of-funds,  within  the  EU  Equity  Financial 
Instrument,  to  provide  capital  to  venture  capital  funds  that  target  notably 
investments  in  more  than  one  Member  State.  National  public  financial 
institutions,  as  well  as  private  investors,  will  be  invited  to  participate  in  the 
fund.  

The EIB Group will continue supporting the growth of SMEs through its wide 
range  of  equity  products  and  particularly  the  enlarged  EIB  Risk  Capital 
Mandate.  Further  cooperation  between  the  EIB  Group  and  the  European 
Commission, including through risk-sharing arrangements, will be developed in 
order to facilitate the mobilisation of additional public and private resources. 

5. 

OTHER MEASURES TO IMPROVE THE ENVIRONMENT FOR SMES 

5.1.1.  Better information for SMEs 

SMEs would greatly benefit from easier access to information at local and regional 
level.  Member  States’  authorities  are  encouraged  to  improve  SMEs’  access  to 
different national and regional sources of finance and, in this context, to evaluate the 
possibility of creating a single national online database of sources of finance based 
on good practices.   

The  European  Commission  and  the  EIB  Group,  in  cooperation  with  financial 
intermediaries,  will  expand  SMEs’  access  to  information  about  the  various  EU 
financial  instruments  and  the  SME  Loan  facility.  Similarly  the  information  to 
intermediaries,  including  smaller  banks,  will  be  improved.  Efforts  will  be  made  to 
simplify the administrative burden and broaden the scope of languages.  

Banks  and  other  financial  institutions  are  encouraged  to  provide  clients  with 
information about alternative financial instruments and actively support networks of 
mentors, advisors and business angels.  

The Commission will: 

1. Reinforce the financial advisory capacity of the Enterprise Europe Network 
in order to provide SMEs with better information about the different sources of 
finance by complementing existing national information structures.  

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2.  Ensure  that  all  the  information  on  EU  finance  will  be  pooled  and  made 
available  through  a  single,  multilingual  online  portal  covering  the  different 
sources of EU finance available for SMEs. 

Banks and other financial intermediaries have declared that they will promote 
actions  among  their  members  to  reinforce  information  about  EU  financial 
instruments and public grants to SMEs.  

5.1.2.  Improve monitoring of the SME lending market  

Currently,  exact  statistics  on  loans  to  SMEs  are  not  collected.  Available 
approximations  such  as  loans  below  €1  million  or  below  €250,000  show  that  the 
SME share in total new loans in the euro area is on average about 20%.32  

Improving the monitoring of the SME lending market would allow better and more 
evidence-based policy making. It would also help assessing the impact of measures 
in  support  of  SMEs'  finance,  as  well  as  the  new  capital  requirements  applicable  to 
credit institutions. 

The Commission will work together with bank federations and will take advice 
from  other  concerned  institutions  (ECB,  EBA)  to  reinforce  the  analytical 
framework for SME lending striving for better comparison and more coherent 
methodology.  

5.1.3.  Promote qualitative rating  

Qualitative  indicators  of  performance  -  the  entrepreneur's  track  record,  the 
competitive  position  of  the  company  in  the  market  or  other  intangible  assets  -  are 
essential to complement the standard valuation of SMEs.  

The  submission  of  qualitative  questionnaires  is  already  a  common  practice  among 
European banks. However, the process of statistically modelling such information is 
not immediate, and most models are facing the difficulty of losing information when 
transforming qualitative data into quantitative models. 

Further,  there  are  already  provisions  in  place  that  allow  SMEs  to  request  from  the 
banks to be made aware of their rating and scores33. It would be important to fully 
implement these provisions in practice.  

The Commission will promote the exchange of good practice and encourages the 
banking sector and SME federations to promote the use of qualitative rating as 
a  tool  to  complement  the  standard  quantitative  assessment  of  SMEs’ 
creditworthiness. 

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33 

ECB  MFI Interest  Rate  Statistics,  Euro  area  new  loans  to  NFC volumes,  average  for Aug  2010 –  Jul 
2011 
Article  145(4)  of  the  Capital  Requirements  Directive,  and  article  418  (4)  of  the  proposed  Capital 
Requirement Regulation. 

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5.1.4.  Stimulate the activity of “Business angels” and cross-border investments  

Business  angels  provide  both  financing  and  managerial  experience,  which  increase 
the  likelihood  of  start-up  enterprises  surviving.  They  often  constitute  the  largest 
source  of  external  funding,  after  family  and  friends,  in  newly  established  ventures. 
Due to their informal nature their activity is difficult to measure.  

The Commission will study the European business angel market and other informed 
markets  and  explore  ideas  to  stimulate  it  by  supporting  investment  and  investor-
readiness  programmes,  encouraging  potential  investor  groups  to  become  business 
angels, and building the capacity of business angel network managers.  

In  2011  the  EIB  group  has  increased  its  Risk  Capital  Mandate  to  €5  billion  and 
extended the scope to include co-investing with business angels.  

The Commission will: 

1. Further encourage co-investments with business angels in different forms in 
co-operation  with  the  EIF  and  Member  States  within  the  possibilities  under 
Structural Funds. 

2.  Consider  measures  to  further  develop  cross-border  matching  between 
enterprises  and  investors,  in  particular  business  angels,  based  on  proposals 
from an expert group in 2012.  

3.  Improve  the  matching  of  offers  and  requests  for  venture  capital  within  the 
Enterprise Europe Network 

5.1.5.  Promote information on SME access to capital markets  

Significant  measures  are  needed  to  create  a  favourable  environment  for  SMEs 
seeking  growth  capital,  focusing  on  ways  to  attract  a  wider  set  of  investors  and 
helping  to  lower  the  cost  of  capital  of  SMEs.  There  is  a  need  to  increase  the 
information  to  mid-sized  enterprises  about  the  advantages  and  costs  associated  to 
listing.  The  Commission  will  also  consider  how  to  promote  access  to  SME  bond 
markets  and  securitisation.  The  Commission,  together  with  the  stakeholders  in  the 
SME  Finance  Forum,  will  continue34 to  contribute  to  information  campaigns  and 
prepare  a  European  information  guide  for  companies  aspiring  to  go  public.  The 
Commission will also carry out promotional activities such as an award for the SME 
listing of the year.  

Stakeholders and stock exchanges in particular are encouraged to increase their 
information  to  SMEs  about  the  advantages  of  a  market  listing  and  how  to  go 
public.  

The Commission will promote the establishment of an independent institute to 
promote    analyses  and  research  on  listed  medium-sized  enterprises  thereby 
increasing investors' interest in this segment. 

34 

«EU Finance Days for SMEs» about funding for SMEs were organised in 2008/10 in all the EU capitals 

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5.1.6.  Policy coordination and implementation 

The  Commission  will  continue  to  work  within  the  SME  Finance  Forum  to  explore 
new  strategies  to  facilitate  access  to  finance  for  SMEs.  Mutual  policy  learning  is 
essential  to  improve  the  performance  of  the  European  financial  system.  Several 
Member  States  already  established  national  SME  Finance  fora  with  business 
organisations, banks and other financial institutions to provide practical solutions to 
improve access to finance.  

National experiences are particularly relevant for the lending practices and process. 
In  various  Member  States  several  actions  have  been  taken  in  order  to  enhance  the 
transparency  of  the  lending  process,  including  feedback  to  SMEs  when  loan 
applications are refused.  

In  some  Member  States,  national  lending  codes  or  credit  mediators  have  been 
established  in  order  to  address  the  problem  of  information  asymmetry  in  the  risk 
assessment process of SMEs and to improve the lending process. In some Member 
States, the Consumer Credit Directive has been extended to small enterprises. While 
these various models may reflect different national circumstances, there is scope for 
an overall enhancement of their functioning.  

The Commission encourages: 

Member States and stakeholder associations to establish national SME Finance 
fora to provide solutions for an improved access to finance.  

Banks,  other  financial  institutions  and  SME  federations  to  establish  national 
codes of conducts and guidelines to improve transparency in the lending process 
and, if appropriate, support credit mediator functions. 

In 2012, the Commission intends to review current lending practices, including 
transparency mechanisms. 

Based  on  the  outcome  of  that  review,  the  Commission  may  consider  taking 
regulatory action to encourage responsible and transparent lending to SMEs. 

6. 

CONCLUSION 

SMEs will be a source for growth and jobs in Europe only if their access to finance is 
improved.  In  the  short  term,  this  means  stabilising  financial  markets  and 
strengthening the banks, while ensuring that credit continues to flow to SMEs.  

In the medium term, the Commission intends to significantly improve the regulatory 
environment  for  SMEs,  fostering  a  single  market  for  venture  capital,  improving 
capital markets and reducing costs and burden for SMEs. The Commission intends to 
reinforce  its  guarantees  and  venture  capital  facilities,  complementing  the  efforts 
carried  out  by  the  EIB  and  Member  States.  Finally,  the  Commission  intends  to 
promote  information  for  SMEs,  to  SMEs  and  on  SMEs,  to  improve  access  to 
financial  instruments,  to  reduce  the  information  gap  faced  by  SMEs  in  accessing 
finance and to facilitate their access to capital markets.  

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The EU and Member States must work together in order to improve SMEs’ access to 
finance.  The  Commission  is  playing  its  part  with  actions  envisaged  in  this  Action 
Plan and will work with Member States, the financial sector and SME federations to 
ensure that the actions bear fruit and contribute to economic recovery. 

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