A policy agenda that addresses the aforementioned constraints is outlined and discussed below. In particular, Table 6.1 summarizes potential next steps by main area, as well as relevant stakeholders from the public and private sectors. It is worth noting that several proposed policy actions would be beneficial for the broader lending environment in Colombia and not solely for SMEs. Moreover, as previously mentioned, some actions are at a high level either due to data unavailability or because they reflect issues that are outside this paper’s scope, meaning that further analysis would be required in order to convert them into specific policy recommendations.

Table 6.1: Policy Agenda to Promote Bank Financing to SMEs

|**Policy Area**|**Relevant Stakeholders***|**Policy Action**|
|---|---|---|
|Macroeconomic<br>Policy|� BdlR<br>� MHCP,SF|▪Ensure positive macroeconomic environment, as well as a<br>stable and consistent financial sectorpolicyregime|
|Legal &<br>Contractual<br>Framework|� MHCP<br>� Private sector (Chambers of<br>Commerce, Asobancaria etc.)|� Review and reform the legal framework for secured lending by<br>consolidating diverse and overlapping legislation to enhance the<br>ability of SMEs to pledge moveable property as collateral<br>� Continue to improve the general framework for creditor rights<br>and insolvency proceedings by strengthening enforcement<br>procedures and registrysystems|
|Financial<br>Sector<br>Regulations|� MHCP, SF<br>� BdlR<br>� Asobancaria|� Assess the effects of the interest rate ceiling (_tasa de usura_) on<br>access to credit by SMEs and as a source of legal and regulatory<br>uncertaintyfor credit institutions|
|Government<br>Support<br>Programs for<br>SMEs|� MCIT, MHCP, DNP<br>� FNG, Bancóldex<br>� SENA<br>� Private sector (Chambers of<br>Commerce, Asobancaria etc.)|� Evaluate government support programs, especially those of<br>FNG and Bancóldex, to determine their additionality and to<br>fine-tune them in order to better attain their intended objectives<br>� Assess how such programs could support capacity-building<br>activities for SMEs (i.e. financial literacy, business skill training<br>etc.) and promote the development of new SME financing<br>instruments (i.e. factoring, risk capital etc.)<br>� Design incentives for SMEs to formalize (e.g. simplification of<br>tax policy/administration, relevant labor and social security<br>regulations, procedures/cost of inscription in commercial<br>registries etc.)<br>� Analyze and further streamline existing inter-institutional<br>coordination ofpoliciesgeared towards the SME market|
|Statistics &<br>Data Collection<br>on SMEs|� MCIT, MHCP, DNP<br>� DANE<br>� Private sector (Chambers of<br>Commerce, Asobancaria etc.)|� Unbundle SMEs from micro enterprises in official statistics<br>� Improve periodic data collection on SMEs in order to identify<br>their characteristics (size, economic sector, region, financial<br>performance, contribution to employment and GDP, informality<br>etc.) and to better understand the demand-side perspective<br>� Expand SME definition to include annual turnover as a criterion|

_* The list of relevant stakeholders is not exhaustive, and other agencies would likely need to be involved for specific policy actions._ A good macroeconomic environment and a stable policy regime are necessary for the sustainable growth of this market going forward. One of the lessons of the last few years is that banks will expand SME lending on their own accord – in spite of the presence of important constraints – when they perceive the attractiveness of this market and have began to saturate ‘easier’ (in terms of business model) market segments such as corporate and consumer lending. However, in order to ensure the sustainable growth of this market, continued strong macroeconomic performance and a stable and consistent policy framework in the financial sector (clear ‘rules of the game’) have been identified as important considerations. These will permit the emergence of alternative financing 39