Market condition. How is business funding today? In the midst of all controversial economic policy debates, investment support is a common priority. It unites various economic schools – from supply theorists to Keynesians – almost all political forces, and now all developed countries. Investments appear to be a condition for turning the current economic recovery into strong and sustainable growth. This is the key to creating jobs and reducing unemployment. This will help, finally, overcome the serious consequences of the financial crisis and get out of the economic crisis and the social crisis that led to it.
The mission is part of this collective imperative after the government announced a set of measures to support investment, including accelerated tax depreciation. This mission focuses on business investment, as opposed to small business funding – mainly in housing – or public investment. And among the various obstacles or levers of this productive investment, this report focuses on financing. This issue is often seen as very complex – with negotiations on new prudential rules for banks or solvency for insurance; it also legitimately provoked passionate discussions after the financial crisis, including the positioning of banks.
Many reports were written on each of these files separately. The mission used these documents, but one of the originalities of our approach is to strive for the simplest and most pedagogical perspective, including for non-specialists: it is really useful to outline an “architectural plan”.
Starting with the basics that are the needs of investments and companies. The approach to start up business loans combines micro and macroeconomics, the sphere of entrepreneurs and the work of economists, and then covers the finances of the economy. To this end, the mission held a broad and interdisciplinary consultation: more than one hundred and twenty meetings with business leaders of all sizes, economists, government officials and regulators, professionals in the financial sector, and trade union officials. These different actors are not always used to talking to each other, which can fuel distrust, which is one of our collective problems. Their mutual lessons, their possible coincidences are even more remarkable: everyone is grateful here, including the written materials that many of them contributed to the mission. It happened in Europe.
Business funding and small business funding for new or existing small enterprises was recognized as a topic of interest to several EU Councils of Ministers in 2000, and was reflected in the financial instruments of the European Multi-Year Program (MAP), as defined by the Council. With the creation of a “guarantee” window for microcredit. Small business microcredit means a loan of less than 25,000 euros: for the purposes of this microcredit report, the same definition applies. In March, the European Council for the first time invited member states to pay special attention to microcredit in order to stimulate the launch and growth of small enterprises.
This microcredit report has been prepared for the attention of the Enterprise Policy Group (GPE). This report focuses on small business access to finance and describes their relationships with state or private banks, private microfinance providers, affiliates, and business support services. This report of the European Commission’s Directorate-General for Entrepreneurship is based on the key findings of a working group of 26 national experts from member and candidate countries and several microfinance practitioners who met seven times in July. This report analyzes a sample of microloans in the amount of 3.5 billion Euros granted to small enterprises this year.
Small enterprises, new or existing, face problems when contacting donors, whether they should invest in fixed assets or get working capital. This inadequate supply of microloans is a serious problem, especially when entrepreneurs are unemployed, women or ethnic minorities. Thus, the offer of microloans is not only a matter of entrepreneurship and economic growth, but also of social integration.
Since banks often perceive microcrediting as a high-risk and low-yield activity due to the high level of default and high cost of processing microloans, there is a gap in the market due to asymmetric information. especially in candidate countries. The existence of this gap is confirmed by several pan-European studies of small enterprises. To fill this market gap, at least in part, government support is available in all member states and most candidate countries. However, the extent and intensity of this support varies significantly from country to country. State support can also be provided by providing loans to specialized lenders, sharing part of the risk with specialized guarantors and / or promoting business support services.