COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS An SME Strategy for a sustainable and digital Europe
Date: 2020-03-10
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: EU strategy, Europe, digital economy, digital technology, digitisation, financing, governance, innovation, market access, small and medium-sized enterprises

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 10.3.2020  COM(2020) 103 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS An SME Strategy for a sustainable and digital Europe  
 
 
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

An SME Strategy for a sustainable and digital Europe 

1.  Introduction 

Europe’s 25 million small and medium enterprises (SMEs) are the backbone of the EU 
economy. They employ around 100 million people, account for more than half of Europe’s 
GDP  and  play  a  key  role  in  adding  value  in  every  sector  of  the  economy.  SMEs  bring 
innovative  solutions  to  challenges  like  climate  change,  resource  efficiency  and  social 
cohesion  and  help  spread  this  innovation  throughout  Europe’s  regions.  They  are  therefore 
central to the EU’s twin transitions to a sustainable and digital economy. They are essential to 
Europe’s  competitiveness  and  prosperity,  economic  and  technological  sovereignty,  and 
resilience  to  external  shocks.  As  such,  they  are  a  core  part  of  the  achievement  of  the  EU’s 
industrial strategy.  

SMEs are deeply woven into Europe’s economic and social fabric. They provide two out 
of three jobs, bring training opportunities across regions and sectors, including for low-skilled 
workers, and support society’s welfare, including in remote and rural areas. Every European 
citizen  knows  someone  who  is  an  entrepreneur  or  works  for  one.  The  daily  challenges  of 
European SMEs to comply with rules and access information, markets and finance are thus 
challenges for the whole of Europe.  

SMEs are very diverse in terms of business models, size, age, and entrepreneurs’ profiles, 
and draw on  a diverse talent  pool  of women and men. They range  from liberal  professions 
and  microenterprises  in  the  services  sector  to  middle-range  industrial  companies,  from 
traditional crafts to high-tech start-ups. This strategy recognises their different needs, helping 
companies not just to grow and scale up, but also to be competitive, resilient, and sustainable. 
It  therefore  sets  out  an  ambitious,  comprehensive  and  cross-cutting  approach,  based  on 
horizontal measures helping all kinds of SMEs as well as actions targeting specific needs.  

The strategy puts forward actions based on the following three pillars: 

  Capacity-building  and  support  for  the  transition  to  sustainability  and 

digitalisation; 

  Reducing regulatory burden and improving market access; and  

  Improving access to financing.  

The  objective  is  to  unleash  the  power  of  Europe's  SMEs  of  all  kinds  to  lead  the  twin 
transitions.  It  aims  to  considerably  increase  the  number  of  SMEs  engaging  in  sustainable 
business practices as well as the number of SMEs employing digital technologies. Ultimately, 
the goal  is  that Europe  becomes the most attractive place to  start  a small business,  make it 
grow and scale up in the single market.  

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To  bring  results,  the  strategy  must  be  driven  jointly  by  EU-level  actions  and  strong 
commitment  by  Member  States.  The  active  involvement  of  the  SME  community  and 
companies  themselves  will  be  key.  The  Strategy  will  therefore  be  underpinned  by  a  robust 
partnership for delivery between the EU and Member States, including regional and local 
authorities. Entrepreneurs should also seize the opportunity of EU investment programmes to 
make their business more digital and sustainable, as well as to grow in the single market and 
beyond.  

The  strategy  builds  on  the  very  strong  foundations  of  the  EU’s  existing  SME  policy 
framework and support programmes, notably the 2008 Small Business Act, the 2016 Start-up 
and  Scale-up  Initiative,  the  Competitiveness  for  Small  and  Medium  Enterprises  (COSME) 
Programme,  and  SME  support  actions  funded  under  the  Horizon  2020  programme  and  the 
European Structural Investment Funds1. It will be instrumental to implementing inter alia the 
European  Green  Deal,  the  Circular  Economy  Action  Plan,  the  European  Strategy  for  Data, 
and the European Social Pillar.   

The  strategy  is  part  of  the  industry  package  that  includes  the  Communication  and  its 
accompanying  Report  on  Identifying  and  addressing  barriers  to  the  Single  Market  (the 
“Single  Market  Barriers  Communication)  2,  the  Long  term  action  plan  for  better 
implementation  and  enforcement  of  single  market  rules  (the  “Enforcement  Action  Plan”)3 
and  the  New  industrial  strategy  for  Europe  (the  “Industrial  strategy”)4.  It  builds  on  many 
findings from the Single Market Barriers Communication as regards obstacles faced by SMEs 
willing  to  operate  cross-border.  Proper  transposition,  application  and  enforcement  of  EU 
legislation  are  key  to  facilitate  SME  growth  within  the  single  market.  The  Enforcement 
Action Plan sets out various initiatives to address these issues. The Industrial strategy stresses 
the role of SMEs for a competitive and innovative European industry.  

2.  Capacity-building  and  support  for  the  transition  to  sustainability  and 

digitalisation 

Competitive sustainability is Europe’s guiding principle for the future.  Achieving a climate 
neutral,  resource  efficient  and  agile  digital  economy  requires  the  full  mobilisation  of 
SMEs.  This  transition  to  a  more  economically,  environmentally  and  socially  sustainable 
Europe  must  go  hand  in  hand  with  the  transition  to  digitalisation.  For  this,  tailor-made 
measures are a prerequisite to develop a thriving SME layer of economy as well as to  give 
opportunities for growth to those SMEs that wish to scale up. EU-wide investment is needed 
in order to create the appropriate business and innovation infrastructure for SMEs. 

SMEs driving the sustainable transition  

Many  SMEs  are  well  equipped,  being  flexible,  high-tech,  innovative  and  committed  to  the 
values driving sustainability and the circular economy. Almost a quarter5 of SMEs in Europe 
already  enable  the  transition  by  offering  green  products  or  services  and  many  SMEs 

1 The European Regional Development Fund (ERDF) and European Social Fund (ESF) has reached out to over 
900.000 and 500.000 SMEs in Europe respectively.  
2 COM(2020)93 final,  10.03.2020  
3 COM(2020)94 final, 10.03.2020  
4 COM(2020)102 final, 10.03.2020  
5 2017 Eurobarometer on SMEs, resource efficiency and green markets 

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(including  social  economy  enterprises)  are  already  doing  a  lot  for  the  communities  where 
they  are  based.  There  are  also  major  challenges.  Some  SMEs  struggle  with  the  transition 
towards  more  sustainable  business  models.  A  third  of  SMEs  report  that  they  face  complex 
administrative  and  legal  procedures  when  trying  to  make  their  business  more  resource-
efficient.  Yet,  as  awareness  of  risks  related  to  climate  and  other  environmental  pressures 
increases and consumer  preferences  change, this  transition  to  sustainable  business  practices 
and conduct is key for SMEs’ continued competitiveness and growth. It is essential to support 
SMEs in this process and equip them with instruments to understand environmental risks and 
mitigate  those  covering  specific  sectors,  including  construction,  plastics,  electronics  and 
agro-food.  

The  over  600  members  of  the  Enterprise  Europe  Network  (EEN)  offer  tailored  services  to 
SMEs.  Many  EEN  members  are  already  helping  SMEs  to  make  the  transition  to 
sustainability.    Building  on  this,  the  EEN  will  provide  dedicated  Sustainability  Advisors 
and other sustainability services. They will assess the needs of SMEs and provide advice on 
investment  in  more  resource-efficient  and  circular  processes  and  infrastructure,  finding 
relevant  commercial  partners,  and  encouraging  peer-to-peer  collaboration.  Furthermore,  the 
European Resource Efficiency Knowledge Centre (EREK) will continue to help SMEs save 
energy, material and water costs. Solutions offered by the energy service companies (ESCOs) 
having the know-how together with technical and financing solutions could benefit SMEs.    

Europe  is  the  birthplace  of  the  green  tech  and  its  leadership  will  depend  on  SMEs  to 
spearhead the innovations in the green sector. This will be supported through the European 
Green  Deal  Investment  Plan6.  As  part  of  the  wider  piloting  of  the  European  Innovation 
Council  (EIC)  to  promote  disruptive  innovation  especially  by  SMEs,  the  Commission  will 
allocate at least EUR 300 million in 2020 alone to high potential start-ups and SMEs for them 
to deliver breakthrough Green Deal innovation. The European Institute of Innovation and 
Technology  (EIT)  will  ensure  that  its  Knowledge  and  Innovation  Communities  (KICs)  are 
more  open  to  SMEs  and  will  increase  their  opportunity  to  participate  in  local  innovation 
ecosystems  in  particular  in  regions  that  lag  behind  in  terms  of  innovation.  This  will  be 
implemented through a dedicated outreach instrument (regional innovation scheme) that will 
strengthen ecosystems where it matters the most. 

Empowering SMEs to reap the benefits of the digital transition  

Only a thriving community of SMEs using digital technologies and data can position Europe 
as  a  world  leader  in  shaping  the  digital  economy.  Digitalisation  can  provide  great 
opportunities  for  SMEs  to  improve  the  efficiency  of  production  processes  and  ability  to 
innovate  products  and  business  models.  Using  advanced  disruptive  technologies,  such  as 
blockchain and Artificial Intelligence (AI), Cloud and High Performance Computing (HPC) 
can dramatically boost their competitiveness.  

But SMEs do not yet fully benefit from data, the lifeblood of the digital economy. Many 
are  not  aware  of  the  value  of  the  data  they  create,  and  are  not  sufficiently  protected  or 
prepared  for  the  upcoming  data-agile  economy.  Only  17%  of  SMEs  have  successfully 
integrated digital  technologies into their businesses, compared to 54% of large companies7. 

6 COM(2020)21 final, 14.1.2020 
7 2018 report by Digital Innovation Hubs Working Group 
https://ec.europa.eu/futurium/en/system/files/ged/dihs_access_to_finance_report_final.pdf 

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Traditional  SMEs  are  often  uncertain  in  their  choice  of  digital  business  strategy,  have 
problems tapping large repositories of data available to larger companies and shy away from 
advanced  AI-based  tools  and  applications.  At  the  same  time,  they  are  very  vulnerable  to 
cyber threats.  

Source: Eurostat/DESI 2019 

Such SMEs will be supported by a network of up to 240 Digital Innovation Hubs (DIH), in 
each region of Europe, underpinned by investment from the Digital Europe Programme and 
from Structural Funds.  

The  ambition  is  not  only  to  deliver  user-friendly  and  targeted  advice  on  sustainability  and 
digitalisation, but also to connect support structures so that every SME has advice nearby. 
The  EEN  will  work  closely  with  DIHs,  Startup  Europe8,  and  others  to  ensure  a  seamless 
support and advice service, including with national, regional and local authorities and support 
structures. The transfer of best practices, know-how and skills can also happen directly from 
digital SMEs to SMEs from other fields. 

As announced in the European Strategy for Data9, the Commission will work on the wider 
accessibility  of  data  and  enabling  data  flows  between  businesses  and  governments  by 
establishing common European data spaces for trusted and secure sharing of data. Fair access 
for  all  companies,  especially  SMEs,  will  be  ensured.  The  Commission  will  also  examine 
potential  issues  with  usage  rights  for  co-generated  data,  in  particular  from  the  industrial 
Internet-of-Things,  to  avoid  possible  disadvantages  for  SMEs.  Furthermore,  it  will  address 
cloud  computing  uptake  by  SMEs,  for  example  through  a  dedicated  marketplace  for  cloud 
services ensuring fair contractual conditions.  

Leveraging talent and intellectual property  

SMEs  can  also  find  it  hard  to  develop  intellectual  property  (IP)  strategies  to  protect  their 
R&D  investments  and  raise  growth  capital,  even  though  these  are  crucial  in  the  twin 
transitions.  Only  9%  of  SMEs  protect  their  IP,  as  they  are  unaware  of  EU  and  national  IP 
initiatives  or  fear  the  complexity  and  expense  of  acquiring  and  enforcing  them.  The 
upcoming Intellectual Property Action Plan will propose measures to make the IP system 
more  effective  for  SMEs,  through  actions  to  simplify  IP  registration  procedures  (e.g. 
reforming the EU legislation on industrial designs), to improve access to strategic IP advice 
(e.g. by making such advice standard in all EU-level R&D funding), and to facilitate the use 
of IP as a lever to gain access to finance. 

8 Startup Europe is an EU initiative to connect local hubs of start-ups across Europe: https://ec.europa.eu/digital-
single-market/en/startup-europe   
9 COM(2020)66 final, 19.02.2020 

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In  both  the  digital  and  sustainability  transitions,  start-ups  and  established  SMEs  alike  are 
challenged  by  a  lack  of  skilled  employees.  They  often  do  not  have  the  same  resources  as 
large companies to invest in the training of their employees. Over 70% of firms report access 
to  talent  as  obstacle  to  new  investment  across  the  EU10.  Availability  of  skilled  staff  or 
experienced managers remains the most important problem for a quarter of EU SMEs11. The 
skills  shortage  is  particularly  acute  for  digitalisation  and  new  technologies,  as  35%  of  the 
labour force have low or no digital skills.  

Member  States  and  social  partners  have  a  key  role  to  play  and  the  EU  can  further  help 
address  these  challenges,  facilitating  access  to  training,  and  helping  match  the  demand  for 
talents  from  SMEs  with  labour  market  supply.  Entrepreneurial  education  and  training  that 
enhances  business  knowledge  and  skills  play  a  key  role  in  making  SMEs  fit  for  the  single 
market.  Educational  and  upskilling  activities  are  essential  for  all  SME  managers  and 
employees,  with  a  particular  focus  on  empowering  women  and  girls  to  be  founders  and 
improving the gender balance among those creating and managing businesses12. 

With  the  support  of  the  Digital  Europe  Programme,  the  Commission  will  develop  Digital 
Crash Courses for SME employees to become proficient in areas such as AI, cybersecurity 
or blockchain, building on the experiences of the Digital Skills and Jobs Coalition platform. 
DIHs will act as intermediaries between SMEs and universities/training providers at the local 
level. Incubating activities will assist SMEs in becoming part of data-driven ecosystems.  

The  Commission  will  also  launch  a  programme  for  “digital  volunteers”  to  allow  young 
skilled  people  and  experienced  seniors  to  share  their  digital  competence  with  traditional 
businesses. It will also support and interlink SME intermediaries such as clusters, EEN and 
EREK to help upskill staff of SMEs in the area of sustainability. 

The Commission will update the Skills Agenda for Europe, including by launching a Pact for 
Skills. It will include a dedicated component for SMEs. Vocational education and training 
(VET)  is  particularly  relevant  for  SMEs  to  make  sure  that  their  workforce  has  the  skills 
needed on the labour market. Furthermore, Member States and regions will be encouraged to 
make  use  of  the  future  European  Social  Fund  Plus  and  of  the  new  possibilities  to  invest 
European  Regional  Development  Funds  in  developing  skills  for  smart  specialisation, 
industrial transition and entrepreneurship.  

The  collaborative  economy  creates  opportunities 
in  areas  such  as  mobility  and 
accommodation for innovative SME platforms intermediating between service providers and 
recipients  and  for  SME  service  providers  who  gain  access  to  wider  circles  of  customers. 
Following  its  2016  Communication  on  the  collaborative  economy13,  the  Commission  will 
continue  to  explore  a  possible  initiative  focusing  on  short-term  accommodation  rental 
services (the largest collaborative economy sector) to promote the balanced and responsible 
development of the collaborative economy across the single market in full respect of public 
interests.  

KEY ACTIONS 

10 EIB Investment report 2018/2019 
11 SAFE survey 2019 
12 Gender Equality Strategy 2020 – 2025 COM(2020)152 final, 04.03.2020 
13 COM(2016)356 final, 02.06.2016 

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  The  Commission  will  upgrade  the  Enterprise  Europe  Network  including  with 

dedicated Sustainability Advisors and other sustainability services.  

  The Commission will develop Digital Crash Courses for SME employees to become 

proficient in areas such as AI, cybersecurity or blockchain.  

  The  Commission  will  launch  a  “digital  volunteers”  programme  to  allow  young 
skilled  people  and  experienced  seniors  to  share  their  digital  competence  with 
traditional businesses.  

  The  Commission  will  update  the  Skills  Agenda  for  Europe,  including  a  Pact  for 
Skills  with  a  dedicated  component  for  SMEs,  and  will  propose  a  Council 
Recommendation aimed at modernising vocational education and training.  

  The  Commission  will  expand  Digital  Innovation  Hubs  in  connection  with  Startup 
Europe  and  the  EEN  and  provide  a  seamless  service  within  local  and  regional 
ecosystems.  

  The  Commission  will  allocate  at  least  EUR  300  million  to  encourage  breakthrough 

Green Deal innovations under the EIC.  

  For  the  SMEs  which  focus  their  activities  on  short-term  accommodation  rental 
services, the Commission will continue to explore a possible collaborative economy 
initiative. 

3.  Reducing regulatory burden and improving market access 

The  single  market  is  the  go-to  market  for  European  SMEs.  It  accounts  for  70%  of  the 
value of SME goods exports, and 80% of all exporting SMEs sell to other Member States14. 
Nevertheless, the number of SMEs exporting to other Member States could be much higher: 
for example, only 17% of all manufacturing sector SMEs export within the single market15. 
The  Single  Market  Barriers  Communication  shows  that  those  most  affected  by  continuing 
barriers, are SMEs.  

Complying  with  regulations,  standards,  labels  and  administrative  formalities  affects 
SMEs more than bigger  companies due to  their limited financial and human resources.  For 
example,  in  the  sector  of  business  services,  costs  incurred  by  SMEs  when  complying  with 
administrative formalities can reach EUR 10,00016. Despite progress since the adoption of the 
Small Business Act, the cumulative impact of regulation remains a major problem for SMEs.   

14 Annual Report on European SMEs – SMEs growing beyond borders 
15 EU-28 Small Business Act factsheet 
16  Ecorys,  “Administrative  formalities  and  costs  involved  in  accessing  markets  cross-border  for  provisions  of 
accountancy, engineering and architecture services”, 2017 

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Biggest obstacles for SMEs when operating in the Single Market (% of SMEs citing obstacle) 

78% 

70% 

70% 

66% 

66% 

62% 

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

complex
administrative
procedures

different national
service rules

lack of access to
information on rules

different national
product rules

different
contractual/legal
practices

concerns about
resolving commercial
disputes

Source: Eurochambres 2019 Business Survey 

European  SMEs  experience  legislation  as  complex  and  burdensome,  especially  due  to  the 
different  procedures  in  Member  States.  These  barriers  deter  many  from  doing  cross-border 
business and scaling-up. If they do, they often use large platforms as intermediaries, leading 
to uneven levels of bargaining power.  

Tackling these barriers is  a joint  responsibility of the EU and Member States. Much of the 
burden  comes  from  national  legislation  and  it  is  important  to  assess  the  impact  of  “gold-
plating  measures”  on  SMEs17.  Together  with  the  Commission,  Member  States  have  to 
continue  a  rigorous  application  of  the  “Think  Small  First”18,  “once  only”19  and  “digital  by 
default”20 principles.  

From its part, the Commission is committed to reduce the burden on SMEs and to give them 
a  stronger  voice  along  the  Better  Regulation  cycle.  Under  the  regulatory  fitness  and 
performance  programme  (REFIT),  the  Commission  systematically  screens  existing  EU 
legislation  with  the  aim  to  reducing  burdens  and  simplifying  legislation.  The  Commission 
will make more systematic use of fitness  checks to  look  at  ways to  digitalise, simplify  and 
achieve the objectives at the lowest cost to the benefits of SMEs. Furthermore, the new “Fit 
for  Future  Platform”21  will  screen  the  existing  EU  legislation  to  identify  potential  for 
simplification and administrative burden reduction.   

For  new  legislation,  the  REFIT  programme  will  be  complemented  and  reinforced  by 
introducing  the  “one-in,  one-out”  (OI-OO)  principle.  The  purpose  is  to  make  sure  that  EU 
legislation  produces  benefits  without  imposing  unnecessary  burdens  on  citizens  and 
businesses. The SME Test is already part of the regular assessment and will continue to be 
applied for all relevant Commission proposals.  

17  EU  legislation  may  leave  flexibility  in  the  level  of  harmonisation  and/or  Member  States’  practice  (“gold 
plating”) COM (2020)93 final, 10.03.2020.    
18 The “Think Small First” principle recalls that SME interests need to be taken into account in policy making, 
at EU as well as national level. 
19  Under  the  “once  only”  principle,  citizens  and  businesses  supply  diverse  data  only  once  to  a  public 
administration. 
20  The  “digital  by  default”  principle  seeks  to  reduce  the  administrative  burden  by  making  digital  delivery  of 
services the default choice of public administrations. 
21 A new high-level group replacing the REFIT Platform to be set up.   

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SMEs are in particular affected by costs created by legislation, given their limited human and 
financial  resources.  To  ensure  that  new  legislation  is  SME-friendly,  the  EU  SME  Envoy22 
will  filter  EU  initiatives,  in  collaboration  with  SME  stakeholders,  to  signal  to  the 
Commission those that merit close attention from an SME perspective. In this context, the EU 
SME  Envoy  will  also  bring  in  the  national  expertise  of  the  SME  Envoys  network.  The 
ambition is that all future legislation, at European and national levels, is made with the end 
user in mind, by identifying potential barriers and mitigating them early on in the process, for 
example by the use of digital tools. The EU SME Envoy will also have a specific role in the 
new  “Fit  for  Future  Platform”  providing  the  SME  perspective  in  identifying  the  existing 
legislation that is particularly burdensome for SMEs. The EU SME Envoy will suggest to the 
Commission  user-friendly  solutions  which  could  be  taken  into  account  for  complying  with 
the legislation. 

Ensuring compliance with single market rules is of particular importance for SMEs, as they 
are  often  affected  disproportionately  by  cross-border  restrictions.  The  Enforcement  Action 
Plan  sets  out  a  list  of  initiatives  that  aim  at  addressing  these  issues,  including  the  Single 
Market Enforcement Task Force with a contribution from the EU SME Envoy and national 
Envoys’ network.  The Commission will monitor - and work with - Member States, and will 
not  hesitate  to  take  strong  enforcement  action  where  necessary  to  ensure  that  the  single 
market  benefits  SMEs.  SMEs  face  proportionally  higher  tax  compliance  costs  than  larger 
enterprises23  and  the  lack  of  tax  harmonisation  remains  one  of  the  main  obstacles  faced  by 
business when operating cross-border.  

Furthermore, rigorous enforcement of EU competition rules ensures that all companies active 
in  the  single  market,  in  particular  SMEs,  can  compete  and  innovate  on  their  merits, 
preventing  the  abuse  of  market  power  and  the  concentration  of  wealth  by  a  few  big 
businesses.   

Lifting the barriers through partnerships and policy experimentation   

A key challenge in Europe is a relative shortage of successful scale-ups. In the United States, 
there are three times more scale-ups than in Europe24. European start-ups and scale-ups face 
several  challenges  ‘on  the  ground’  as  they  attract  and  retain  talent,  secure  market 
opportunities  and  increase  revenues.  Many  Member  States  successfully  addressed  these 
challenges  and  many  good  practices  are  already  in  place.  Multiplying  these  across  the  EU 
would provide a major boost to start-up development and SME growth.  

In light of this, the Commission, in close cooperation with Member States and stakeholders, 
such as the EIC Forum, will promote best practices and launch a new political initiative, an 
EU  Start-up  Nations  Standard,  inviting  Member  States  to  implement  such  practices  at 
local,  regional  and  national  levels.  The  ambition  is  to  make  Europe  the  most  attractive 
Start-up  and  Scale-up  continent.  The  initiative  will  focus  on  making  it  easier  to  start-up 
and expand across borders, streamline the implementation of the rules on procedures for visa 
applications and residence permits for third country talent, make granting of employee stock 
options  more  attractive,  promote  venture-building  and  tech  transfer  from  universities, 
increase  access  to  finance  for  scaling-up,  and  promote  cross-border  digital  tools  and 

22  The  EU  SME  Envoy  ensures  the  link  between  SME  policy  making  at  EU  level  and  the  national  SME 
envoys/bodies in charge of SME policy and chairs the network of national SME envoys. 
23 European Commission Study on Tax Compliance Costs for SMEs, 2018 
24 Mind the Bridge: Tech Scale-up Europe, 2019 Report 

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platforms.  To  complement  this,  the  Commission  will  consult  and  assess  the  need  for 
additional company law measures to facilitate cross-border expansion and scale-up by SMEs.  

Some very innovative solutions fail to see the light of day because of regulations which might 
be  outdated  or  poorly  adapted  for  fast  evolving  technologies.  One  way  to  address  this  is 
through  regulatory  sandboxes.  This  enables  innovative  solutions  not  already  foreseen  in 
regulations or guidelines to be live-tested with supervisors and regulators, provided that the 
appropriate  conditions  are  in  place,  for  example  to  ensure  equal  treatment.  Regulatory 
sandboxes  provide  up-to-date  information  to  regulators  and  supervisors  on,  and  experience 
with,  new  tech,  while  enabling  policy  experimentation.  Some  Member  States  have  already 
experimented with such sandboxes for innovative financial services.  

The  Services  Directive  is  a  key  instrument  against  market  barriers.  Partnerships  among 
border  regions,  which  aim  to  enhance  cooperation  between  regional  authorities,  can  help 
SMEs overcome market barriers in the provision of services. A call should lead to three such 
pilot areas by the end of 2020, in which partner regions jointly improve, align or coordinate 
the rules and procedures on the cross-border provision of services, for example, on posting of 
workers and using digital tools.  

The Commission will complement these efforts by encouraging Member States to implement 
the Single Digital Gateway25 in an SME friendly way. Member States should aim to provide 
SMEs  with  easy  online  access  to  information,  procedures  and  assistance  services  regarding 
all  their  queries  linked  to  doing  business  across  borders,  including  advice  on  public 
procurement and sources of funding. Member States should inter-link their services in a one-
stop-shop in order to provide SMEs with a coordinated reply to all such queries.  

Up  to  71%  of  SMEs  who  tried  the  existing  mutual  recognition  system  for  non-harmonised 
goods26 met with a market access denial decision27 . The Commission, after discussing with 
the  Member  States  expert  group  on  mutual  recognition,  will  work  to  promote  ‘mutual 
recognition  alliances’  among  Member  States  in  sectors  such  as  food  supplements  and 
jewellery.     

In  the  diverse  industrial  landscape,  the  space  and  defence  sectors  are  key  for  the  EU’s 
strategic  and  technological  sovereignty  and  offer  great  potential  for  European  SMEs. 
However, the defence sector supply chains have been predominantly built on a national basis. 
The  Commission  will  thus  boost  cross-border  cooperation  and  entry  of  new  players  by 
maximising the potential of the European Defence Fund. In particular this will include calls 
for  proposals  targeted  at  SMEs,  the  dedicated  SME  bonus  and  award  criterion,  and 
connecting  SMEs  with  the  wider  defence  community.  The  Fund  will  help  to  open  up  the 
defence  supply  chains,  linking  the  large  system  integrators  with  the  entire  defence  SMEs 
ecosystem  across  the  Union.    The  Commission  will  also  map  the  strengths  of  relevant 
Research  and  Technology  Organisations  (RTOs)  and  universities  which  can  support 
innovative start-ups and SMEs in the sector.  

25 Regulation (EU) 2018/1724 establishes a single digital gateway to provide information, procedures, assistance 
and problem solving services for users in their own countries and across borders.  
26  Goods  that  are  not  harmonised  by  EU  legislation,  such  as  textile,  footwear,  childcare  articles,  jewellery, 
tableware or furniture 
27 COM(2020)93 final, 10.03.2020  

9 

 
 
                                                           
 
The Commission also aims to increase the number of successful start-ups and scale-ups in the 
space sector, which are commercialising EU space technologies. It will promote, through the 
EU  Space  Programme,  the  emergence  of  a  European  New  Space  eco-system  to  foster 
entrepreneurship.  The  new  Space  Entrepreneurship  Initiative  “CASSINI”  will  regroup 
services  such  as  acceleration,  business  incubation,  seed-funding  and  pre-commercial 
procurement.  

Public procurement also offers untapped opportunities within the single market for SMEs, 
including start-ups, who find it hard to successfully compete in public tenders. There are two 
types  of  challenges.  On  the  one  hand,  the  public  sector  is  relatively  risk-averse,  and 
frequently  lacks  the  skill  set  to  procure  innovation.  On  the  other  hand,  many  economic 
operators, and SMEs in particular, find public tendering complex or unsuitable for them.  

To address this, the Commission calls on Member States and their contracting authorities to 
use the flexibility offered by the EU’s new procurement framework. This entails dividing 
larger  contracts  into  smaller  lots,  expanding  strategic  procurement,  in  particular  innovation 
procurement, leaving IPR - where appropriate - with SMEs so that they can commercialise it, 
and completing the digitalisation of their procurement processes. The Commission will also 
encourage  Member  States  to  use  digital  platforms  to  stimulate  innovative  solutions  from 
SMEs  and  start-ups  and  their  cross-border  access  to  public  procurement  contracts.  The 
Commission  will  also  launch  the  Big  Buyers  and  Networks  Initiative  to  facilitate  joint 
purchases of innovation and sustainable products; promote matchmaking between buyers and 
suppliers  of  innovation  and  track  progress  through  national  benchmarking.  Furthermore,  it 
will launch a label for display by public buyers, who adhere to “SME-friendly” procurement 
practices  and  work  with  its  international  trading  partners  to  spread  adoption  of  its 
procurement-relevant  standards,  such  as  e-invoicing.  SMEs  providing  innovative  green 
products and services can be supported by an increased uptake of Green Public Procurement 
28. 

Buying an existing company is often a more advantageous alternative to starting a business. It 
is  estimated  that  every  year,  around  450,000  SMEs  change  ownership  affecting  more  than 
two million employees. However, in a third of cases the transfer is not successful and, as a 
result,  Europe  loses  around  150,000  enterprises  and  600,000  jobs29.  The  reasons  are  often 
lack  of  early  preparation,  difficulty  in  finding  a  successor,  and  unfavourable  tax  and 
regulatory measures.  

The  Commission  will  continue  its  work  on  facilitating  business  transfers  and  will  support 
Member States in their efforts of establishing a transfer-friendly business environment30. The 
recently  adopted  Directive  on  preventive  restructuring  frameworks  and  second  chance31 
addressed many concerns of companies in distress and the Commission will now support all 
Member  States  in  transposing  its  provisions  into  their  national  laws  so  that  companies  in 
financial  difficulties  have  access  to  adequate  support  services  helping  them  avoiding 
bankruptcy. 

Enhancing fairness in B2B relations  

28 COM(2020)98 final, 11.03.2020 
29 Extrapolation based on Business Dynamics: Start-ups, Business transfer and Bankruptcy, Final report 2011, p. 
10,  http://ec.europa.eu/DocsRoom/documents/10448/attachments/1/translations  
30 Directive on cross border conversions, mergers and divisions (EU) 2019/2121 adopted 27 November 2019 
31 Directive 2019/1023 adopted in June 2019  

10 

 
 
                                                           
SMEs  play  an  essential  role  in  an  increasingly  dense  networks  of  corporates,  start-ups  and 
SMEs  alike  who  work  together  across  sectors  and  value  chains  to  create  the  products  and 
services  of  the  future.  It  is  important  that  SMEs  and  start-ups  are  included  in  the  EU’s 
strategic value chains and have their specific needs addressed, to help them collaborate and 
scale-up across the single market and globally.  

Due to increased concentration and vertical integration in supply chains, the main customers 
of SMEs are often much larger organisations. This leads to asymmetries in bargaining power 
and  increases  the  risk  of  small  businesses  being  subject  to  unfair  business  practices  and 
conditions32, including late payments and access to data.  

Whilst  the  Late  Payment  Directive  has  reduced  delays  for  both  business-to-business  and 
business-to-platform  transactions,  only  40%  of  businesses  in  the  EU  are  paid  on  time33. 
Moreover, late payment  accounts for one out of four bankruptcies among SMEs in the EU. 
There needs to be a decisive shift towards a new business culture in which prompt payment is 
the norm. To this end, the Commission will support the implementation of the Late Payment 
Directive by equipping it with strong monitoring and enforcement tools. These could include 
a virtual observatory for monitoring payment delays, clarifying unfair payment practices, and 
exploring the feasibility of alternative resolution/mediation mechanisms for SMEs  for a fast 
resolution of payment disputes in commercial transactions.  

Harnessing benefits of global markets 

Global markets are an important source of growth for SMEs. However, only 600,000 SMEs 
employing roughly 6 million people export goods outside the EU. In multilateral and bilateral 
dialogues,  the  Commission  will  promote  an  SME-friendly  environment  in  third  countries 
through  the  exchange  of  good  practices  with  its  partners.  It  will  also  launch  a  new 
information  portal  to  raise  awareness  of  SMEs  on  trade  policies  and  provide  detailed 
information on customs procedures and formalities for exporting to third countries. 

SMEs  benefit  more  from  rule-based  trade  opening  than  large  companies,  which  have  more 
resources  for  overcoming  trade  barriers.  To  simplify  access  to  international  markets  by 
SMEs, the Commission is continuously negotiating new trade and investment agreements and 
challenging  trade  barriers  that  disproportionately  affect  SMEs.  The  Commission  will 
continue  to  include  dedicated  SME  chapters  in  all  its  trade  agreements  together  with 
dedicated  measures  to  enable  SMEs  to  tap  the  benefits,  such  as  connecting  SMEs  through 
international  industry  clusters,  the  EEN,  the  EU  SME  Centre34,  and  actions  supporting 
European SMEs to participate in public procurement outside the EU.  

EU Delegations in countries with which the EU concluded an FTA will provide support by 
addressing queries on practical difficulties of SMEs linked to the implementation of FTAs.  

The EU stands firm  against unfair trade practices through trade defence instruments (TDIs) 
when  EU  companies,  including  SMEs,  are  harmed  by  dumped  or  subsidised  imports.  The 

32  2018  EU  publication  “A  comparative  analysis  of  legal  measures  vs.  soft-law  instruments  for  improving 
payment behaviour” 
332018  EU  publication  “A  comparative  analysis  of  legal  measures  vs.  soft-law  instruments  for  improving 
payment behaviour” 
34 The EU SME Centre in Beijing provides a first line of assistance to European SMEs wishing to develop their 
presence in the Chinese market www.eusmecentre.org.cn  

11 

 
 
                                                           
Commission is increasing its dedicated support to SMEs to facilitate their access to TDI and 
cooperation with the Commission during investigations35. 

The  newly  created  function  of  Chief  Trade  Enforcement  Officer  will,  amongst  others, 
monitor and improve the compliance with our trade agreements. This will further enhance the 
work on the elimination of barriers to trade which in particular impact SMEs. Furthermore, 
the  EU  will  actively  engage  in  a  dedicated  economic  outreach  and  diplomacy  for  SMEs  to 
support their access to third country markets. Opportunities for European entrepreneurs will 
be  expanded  through  the  Erasmus  for  Young  Entrepreneurs  Global  scheme  to  gain  new 
experiences in third country markets. 

35  Regulation (EU) 2018/825 adopted on 30 May 2018   

12 

 
 
 
 
                                                           
KEY ACTIONS 

  The EU SME Envoy and the network of national SME Envoys will contribute to 
the work of the Commission’s Single Market Enforcement Task Force, to be set 
up  as  a  result  of  the  Enforcement  Action  Plan,  to  address  among  others  gold-
plating in the transposition process with a view to keep the regulatory burden on 
SMEs to a minimum.   

  The Commission will encourage Member States to implement the Single Digital 
Gateway in  an SME-friendly way. Member States should link their services in a 
one-stop-shop.  

  The EU SME Envoy will filter EU initiatives to signal to the Commission those 
that merit close attention from an SME perspective and have a specific role in the 
new Fit for Future Platform. 

  The  Commission  will  mobilise  Member  States  behind  an  EU  Start-up  Nations 
Standard to share and adopt best practices to accelerate the growth of high-tech 
SMEs and start-ups. 

  The Commission calls on Member States and their contracting authorities to use 
the  flexibility  offered  by  the  EU’s  new  procurement  framework  to  enhance 
opportunities for SMEs including through the use of digital tools and platforms to 
step  up  cross  border  procurement.  The  Commission  will  issue  guidance  and 
support to contracting authorities.  

  The  Commission  will  encourage  Member  States  to  develop  proposals  for 

regulatory sandboxes by launching a pilot. 

  The  Commission  will  launch  a  call  for  pioneer  partnerships  among  border 
regions  to  enhance  cooperation  in  enforcing  the  single  market  and  removal  of 
administrative barriers. 

  The Commission will support the Member States in enforcing the Late Payment 
Directive by setting up monitoring and better enforcement tools and exploring the 
feasibility of alternative resolution/mediation mechanisms for SMEs. 

  The  Commission  will  facilitate  cross-border  cooperation  with  and  among  SMEs 
under  the  European  Defence  Fund  and  map  strengths  in  its  research  and 
innovation eco-system. 

  The Commission will launch a Space Entrepreneurship Initiative ‘CASSINI’. 
  The Commission will support Member States in transposing the recently adopted 
Directive  on  preventive  restructuring  frameworks  and  second  chance,  by 
helping  them  set  up  early  warning  mechanisms  for  companies  in  financial 
difficulties to avoid bankruptcy.  

  The Commission will explore with Member States possible measures to create a 

supportive environment for transfer of SMEs.  

  The  Commission  will  continue  to  enhance  SMEs  access  to  third  country 
markets including through dedicated SME chapters, use of dialogues to exchange 
good practices with trade partners and a new information portal. The Commission 
will facilitate SME access to trade defence instruments. 

  EU Delegations will provide support by addressing queries of SMEs linked to the 

FTAs. 

  The  Commission  will  extend  the  Erasmus  for  Young  Entrepreneurs  Global 

scheme.  

13 

 
 
 
4.  Improving access to financing  

Access  to  finance  is  essential  for  SMEs  to  finance  the  investment  needs  for  the  transition. 
However, at all stages of development, small businesses struggle more than large enterprises 
to get finance. In the case of young entrepreneurs and start-ups, this can be for many reasons: 
such  as  not  having  a  proven  financial  track  record,  lacking  collateral  or  investors  lacking 
information  to  assess  their  credit-risk  or  value  their  intangible  assets.   Improving  access  to 
finance  requires  an  approach  that  combines  a  conducive  regulatory  environment,  sufficient 
and  aligned  EU  and  national  funding  as  well  as  access  to  networks  of  companies  and 
investors.  

SMEs face a major finance gap in Europe of EUR 20-35 billion despite substantial support 
programmes  at  EU  and  national  level36,  and  in  some  Member  States,  access  to  finance 
remains one of the key problems they face37. In 2019, 18% of SMEs in the EU did not obtain 
the  full  bank  loan  they  had  planned  for.  This  puts  SMEs  at  a  disadvantage  as  bank-based 
finance  accounts  for  roughly  90%  of  their  financing  needs.  EU  banking  regulation  must 
provide  the  foundation  for  a  stable  banking  system  that  delivers  adequate  finance  to  all 
businesses. The EU banking package maintained the SME supporting factor and extended it 
to all loans provided to SMEs. The Commission will ensure that any future financial market 
legislation takes account of the interests of European SMEs and supports their uninterrupted 
access to a wide array of financing options.  

Diversifying sources of funding and making more SMEs investment ready 

Nevertheless,  there  is  a  need  to  diversify  sources  of  finance.  Venture  capital  invested  in 
European  companies  increased  by  13%  to  EUR  8  billion  in  2018  and  the  share  of  equity 
fundraising from outside Europe increased from 7% to 20% in 201838.  However, only 10% 
of  businesses  in  Europe  used  capital  market  finance  compared  to  over  25%  in  the  US. 
European  venture  capital  investments  are  roughly  eight  times  smaller  than  in  the  US  and 
therefore not deep enough to finance the growth of European businesses39. 

Innovative, fast-growing SMEs and start-ups with important capital needs often move abroad 
to  find risk capital40. This  is  not  only  a risk  for Europe's technological  sovereignty,  growth 
and jobs, but it also has a downstream impact on its wider fleet of SMEs.  

Furthermore, European investors can be reluctant to invest in start-ups due to challenges in 
assessing the market potential and/or IP underpinning an SME's new tech service or product. 
This  makes  it  harder  to  assess  the  valuation  of  the  start-up  itself.  'Tech  due  diligence' 
services  can  address  this  and  have  been  successful  in  other  regions,  but  are  not  yet  readily 
available in Europe. They ultimately benefit all parties involved: the SME, potential investors 
and the wider innovation ecosystem. An EU pilot would allow for more precise valuation of 

36 Debt financing gap per year during 2014-2018; see SWD(2018) 320 final of 7.6.2018  
37  European  Commission  and  European  Central  Bank,  “Survey  on  the  Access  to  Finance  of  Enterprises”, 
11.2019 
38 Invest Europe (2019)20 
39 Afme Capital Markets Union Performance Indicators Report 2019 
40 Financing the Deep Tech Revolution (EC-EIB study, 2018)  

14 

 
 
                                                           
high-tech  start-ups  and  later  stage  tech  SMEs  on  the  basis  of  their  technology  and  IP 
portfolio41. 

More private investment needs to be unleashed in Europe. The Commission will deploy new 
ways of risk-sharing with the private sector, such as the ESCALAR initiative to boost the size 
of venture capital funds, step up its investment efforts and work towards a revamped Capital 
Markets Union Action Plan. The Capital Markets Union aims to diversify sources of funding 
for companies at all stages of their development.  

Laying the ground work for an SME IPO Fund 

SMEs  in  Europe  find  limited  possibilities  for  growth  financing,  such  as  listing  on  capital 
markets through an Initial Public Offering (IPO). Capital markets are an important source of 
funding  for  SMEs  growing  into  mid-caps  and  ultimately  large  companies.  However,  the 
number  of  SME  IPOs  declined  sharply  in  the  aftermath  of  the  financial  crisis  and  has  not 
recovered since. In 2019, the value and number of European IPOs continued to fall by 40% 
and  47%,  respectively,  relative  to  201842.  Many  institutional  investors  do  not  engage 
sufficiently in SME financing. 

To  address  this,  public  funding  could  act  as  an  anchor  investment  to  attract  more  private 
investors in high-growth, innovative SMEs at the stage of public listing. An SME IPO Fund 
would support SMEs through and beyond the listing process. It will build on the analysis of 
the EU IPO market and testing with investors and stakeholders.  

Creating a more conducive and inclusive environment for access to finance  

In  recent  years,  there  has  been  a  considerable  decline  in  SME  investment  research.  The 
review of the Markets in Financial Instrument Directive that the Commission will carry out in 
2020 will look at how to stimulate research coverage on SMEs. 

Fintech  innovation  based  on  distributed-ledger  technology  ("blockchain")  can  open  new 
pathways for SMEs to directly engage with investors, either via trustworthy intermediaries or 
decentralised by themselves. It can enable SMEs to issue crypto assets and digital tokens, for 
instance  in  the  form  of  bonds.  These  are  attractive  for  investors  because  they  can  be 
immediately traded. This is a way to offer faster, more efficient and cost-effective financing 
for SMEs. The Commission will facilitate the use of crypto assets and the uptake of digital 
tokens by SMEs, investors and intermediaries, in alignment with the EU’s upcoming Digital 
Finance Strategy. 

State  aid  rules  have  enabled  significant  national  support  for  SMEs  and  risk  capital43.  The 
Commission is streamlining and reviewing relevant EU state aid rules by the end of 2021 to 
ensure they are still fit for purpose. In the review the Commission will look to ensure that the 
rules encourage participation of SMEs  in  Important  Projects  of Common European  Interest 
(IPCEI).  

41 Leveraging intelligence from https://www.innoradar.eu 
42 https://www.pwc.co.uk/audit-assurance/assets/pdf/ipo-watch-q4-2019-annual-review.pdf 
43 Expenditure for 2018 amounted to EUR 216 million for the objective ‘Risk capital’ and EUR 501 million for 
the objective ‘SMEs’.   

15 

 
 
                                                           
In addition,  lack of diversity  among  those receiving investment  reduces the talent  pool  and 
innovation.  Women  launched  one  third  of  companies  in  Europe,  but  their  companies  are 
underrepresented  when  it  comes  to  raising  risk  capital.  In  2019,  more  than  92%  of  venture 
capital raised by European tech companies went to all-male founding teams44. InvestEU – EU 
future investment funding - could help stimulate investment in and with women and provide 
targeted support to extend the pipeline of investible female-led companies and funds under a 
gender-smart financing initiative. Furthermore, the number of women-led SMEs benefiting 
from the fully-fledged EIC will be tripled. 

Mobilising EU, national and private financing for SMEs through InvestEU  

In  2014-2018,  EU  financial  instruments  helped  mobilise  EUR  100  billion  of  financing, 
notably  for  SMEs,  in  the  form  of  debt  and  equity  finance.  The  EU  Investment  Plan  is 
expected  to  support  over  1  million  SMEs.  However,  there  needs  to  be  continued  EU  and 
national support to narrow the SME financing gap.  

Under the SME window of InvestEU, the Commission will build on the positive experiences 
with  the existing EU SME guarantee schemes45. It  will create  a single integrated  guarantee 
facility  targeting  SMEs  perceived  as  high  risk  or  having  insufficient  collateral,  including 
innovative, those from the cultural and creative sectors, the SMEs transitioning from resource 
and  energy  intensive  models  towards  more  sustainable  ones,  and  those  adopting  digital 
business  practices.  The  SME  window  of  InvestEU  will  support  equity  financing  for  SMEs 
and  small  midcaps  in  areas  of  special  EU  policy  interest  such  as  space  and  defence, 
sustainability, digitalisation, innovation, gender-smart financing, deep and green tech. For 
example, the funding will be pooled from  the EU, Member States and the private sector to 
increase access  to  equity finance for innovative  SMEs and start-ups that develop  and adopt 
green tech solutions. InvestEU will allow financing along all development stages from start-
up to scale-up, and IPO. It will help leverage private funding from investors such as business 
angels, family offices, venture capital funds, pension funds, and insurance companies.  

The  Commission  will  work  closely  with  Member  States  to  pool  funding  and  address 
geographical  imbalances  in  investments  and  access  to  finance,  in  particular  through  the 
Digital  Innovation  and  Scaleup  initiative46.  In  addition,  the  Social  Investment  and  Skills 
window  of  InvestEU  will  improve  access  to  microfinance,  financing  to  social  enterprises, 
social and impact investment and skills. 

KEY ACTIONS: 

  The  Commission  will  support  Initial  Public  Offerings  (IPOs)  of  SMEs  with 
investments channelled through a new private-public fund, to be developed under the 
InvestEU programme starting 2021 under the Capital Markets Union.  

  The Commission will introduce a first-of-a-kind risk/reward mechanism to boost the 
size of venture capital funds and crowd in private investments for scaling up through 
the ESCALAR initiative. 

44 “2019 State of European Tech report” https://2019.stateofeuropeantech.com/chart/103-1338/  
45 Available under COSME, Horizon 2020, the Creative Europe programme and EU cohesion policy funds 
46  https://ec.europa.eu/digital-single-market/en/news/launch-digital-innovation-and-scale-initiative-central-
eastern-and-south-eastern-europe 

16 

 
 
                                                           
  The  Commission  will  launch  a  gender-smart  financing  initiative  to  stimulate 
female 

for  women-led  companies  and 

to  empower 

funds  and 

funding 
entrepreneurship.  

  The Commission will launch a green tech investment initiative to pool funding from 
the EU, Member States and the private sector to increase access to equity finance for 
innovative SMEs and start-ups that develop and adopt green tech solutions.   

  The  Commission  will  launch  a  blockchain-based  initiative  enabling  issuance  and 
trading  of  SME  bonds  across  Europe,  using  the  European  Blockchain  Services 
Infrastructure. 

  The Commission will co-fund tech due diligence services under an EU pilot project 
to  enable  more  precise  valuations  high  tech  start-ups  and  prepare  their  investment 
readiness. 

  The Commission  will  further  simplify the existing state aid rules  on combinations 
of  national  funds  with  InvestEU  and  Horizon  funds.    This  will  make  it  easier  for 
SMEs  to  benefit  from  pooled  resources  to  help  them  with  the  twin  transitions.  
Furthermore,  as  part  of  its  ongoing  review  of  state  aid  rules,  the  Commission  will 
revise  state  aid  rules  for  risk  finance  and  the  IPCEI  communication,  to  further 
support SME involvement, ensure crowding-in of private investment while avoiding 
distortions of the level playing field. 

5. 

Governance: an EU-Member State partnership for delivery 

The SME Strategy must be driven by commitment and actions at both EU and Member State 
level. As many SMEs are deeply rooted in regional and local ecosystems where they provide 
jobs,  training,  tax  revenues  and  social  welfare,  this  commitment  must  extend  to  regional 
authorities. The strategy’s implementation will be underpinned by a strong partnership of all 
actors  who  share  responsibility  for  delivery  -  EU,  national,  regional  and  local  authorities, 
SMEs  and  investors.  It  will  involve  regular  political  stocktaking  of  progress,  measurement 
and monitoring.  

The SME Envoys network is an important tool to ensure this EU-Member State partnership. 
It represents Member States’ national authorities in charge of SME policy, and provides an 
organic link between these authorities, the local business communities and the EU. With the 
renewal of its mandate in 2020, the network’s role will be reinforced and its interaction with 
regional bodies and authorities strengthened.  

The  Commission  will  appoint  a  dedicated  high  level  EU  SME  Envoy  who  will  drive  the 
work of the network to ensure the implementation of strategy and the application of the Think 
Small  First  principle  in  all  EU  policies.  The  EU  SME  Envoy  will  also  track  the 
implementation in the individual Member States. In order to facilitate the mainstreaming of 
the SME strategy across all policy areas, the EU SME Envoy will be closely involved in the 
European  Semester  process.  The  EU  SME  Envoy  will  raise  awareness  on  SME-related 
aspects  in  the  Commission‘s  Better  Regulation  agenda  in  a  regular  dialogue  with  the 
Regulatory Scrutiny Board and also within the Fit for Future platform.  

To complement the activities of the (public sector) SME Envoys network, the Commission 
will  also  work  closely  with  Strategic  Entrepreneurship  Ambassadors,  a  new  advisory 
group of entrepreneurs from across Europe which will play the role of a sounding board.  

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The  new  strategy  will  be  subject  to  a  regular  review.  The  Commission  will  continue  to 
publish  annually  an  enhanced  SME  Performance  Review.  This  review  will  also  monitor 
national start-up friendly policies ("Europe Startup Nations" index), the engagement of SMEs 
in sustainable business practices, as well as the digitalisation of SMEs47 (DESI index). This 
review will be presented and discussed at  yearly SME Assembly to  provide an opportunity 
for local stakeholders and the wider SME community to get actively involved. 

The SME Envoys network and other EU institutions will be involved in the monitoring of the 
implementation  of  the  strategy,  for  instance,  through  the  Envoys’  annual  report  to  the 
Competitiveness  Council  and  a  regular  dialogue  with  the  European  Parliament.  To  prepare 
this  report,  the  EU  SME  Envoy  –  together  with  national  SME  Envoys  -  will  meet  SME 
policymakers  and other  stakeholders  in  Member  States to  also  discuss SME-relevant  issues 
identified  in  the  European  Semester  process.    Based  on  analysis  derived  from  these 
evaluation mechanisms, the EU SME Envoy will coordinate with the national SME Envoys 
to  develop  national  implementation  plans  for  this  SME  strategy  in  cooperation  with  local 
business stakeholders. 

The  EU  SME  Definition  is  a  key  tool  making  sure  that  this  strategy  targets  the  right 
population,  i.e.  that  it  delivers  support  and  benefits  to  the  enterprises  most  in  need.  The 
Commission regularly monitors whether it is fit for that purpose. According to a recent public 
consultation48,  studies  and  surveys  the  definition  works  well  and  is  easy  to  use  for  the 
overwhelming majority  of EU SMEs that are small  and autonomous. The Commission  will 
further  assess  and  report  on  specific  issues  raised,  as  regards,  for  example,  complex 
ownership structures or possible “lock-in effects”. 

KEY ACTIONS: 

  The Commission will appoint a high level EU SME Envoy. 
  The  Commission  will  reinforce  the  SME  Envoys  Network  to  strengthen  the  link 

between the EU and national level on SME policy. 

  The Commission will launch a group of Strategic Entrepreneurship Ambassadors. 
  The EU SME Envoy will raise awareness on SME-related aspects in a regular dialogue 

with the Regulatory Scrutiny Board.  

47 https://ec.europa.eu/digital-single-market/en/integration-digital-technology 
48 Open public consultation on the SME Definition: https://ec.europa.eu/info/consultations/public-consultation-
review-sme-definition_en  

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