The Impact of the Global Crisis on SME

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The Impact of the Global Crisis on SME
Entrepreneurship Financing and Policy
responsesOECD Turin Round Table 26-27 March
2009

• Marcel Roy
• Secretary General
• AECM
• Rue Washington 40, 1050 Brussels, Belgium
• Tel/Fax 00 32 / 2 640 51 77 info_at_aecm.be /
  www.aecm.be

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AECM

• Mission Represent interests of SME guarantee
  schemes in Europe
• 34 active schemes in 18 countries
• Members non-profit organisations providing SME
  credit guarantees to improve access to finance
• Total outstanding 55 bn for 1,6 mn SMEs
  (roughly 8 of total)
• Member activities regular activities,
  participation in public support programmes
• CIP, temporary aid measures

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AECMs view of crisis

• SME financial situation
• SMEs are impacted in various ways
• Banks need to manage balance sheets and increase
  regulatory capital positions gt risk of credit
  rationing
• SMEs are affected as suppliers to large
  companies, particularly in problem sectors
  (automotive and building)
• Increase of payment delays gt risk default of
  otherwise healthy SMEs

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AECMs view of crisis

• Access to finance situation
• Contrasted picture according to MS
• Intensity of crisis impact very different, from
  very low (Czech Rep., Slovakia) to very
  pronounced (Hungary, Estonia)
• Supply More difficult access to finance for SMEs
  (credit conditions tightened, more selective
  credit policy according to creditworthiness,
  reduction or cancellation of credit lines)
• Demand Decreasing demand for investment loans,
  increasing demand for working capital loans

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AECMs view of crisis

• Added value of guarantees
• Guarantees schemes ideally placed to fight crisis
  impact
• Risk sharing Up to 80 of credit amount
• Reliable partner Specialized entities subject to
  supervision and prudently managed
• First class collateral Often payable on first
  demand and for face value of guarantee amount
• Mitigation effect Presence of guarantee can
  lower regulatory funds requirements (subject to
  conditions)
• Cost-effectiveness High leverage factor of the
  guarantee schemes own funds in relation to
  guarantee volume (x8)
• Specific credit assessment Knowledge of local
  context and SME sector (qual. Factors),
  individual assessment process

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AECMs view of crisis

• Activities and policy suggestions
• Guarantee serve as vector for public support
  programmes (temporary aid measures)
• Increase of CIP and national volumes suggested
• A more long-term relaxation of State aid measures
  needed
• Investigation of new guarantee products for short
  term loans (working capital)
• Zero-ponderation for the counterguaranteed part
  of the guarantee needed under Basel II where not
  yet possible