Curing SMEs’ growing pains

Small- and medium-sized businesses (SMEs), the engine of European productivity and competitiveness, are an important part of EU regional policy.

Boosting the growth of small business in Europe’s regions could play a role in meeting the challenges of globalisation.

Much of the European Commission’s concern about SMEs and regional funds is to improve access to the available funds. SMEs are still put off by the bureaucratic obstacles that have to be cleared if they are to get any results. Although ample opportunities for obtaining EU research funds exist, for example, under the seventh framework programme for research (FP7), the prerequisite to hook up with businesses in other countries is off-putting for some.

"The issue from our point of view is that it’s quite difficult to get those funds. The amount of work you have to put in is prohibitive in many firms," says Simon Briault, of the Federation of Small Businesses, a lobby representing the interests of British SMEs.

Maria Radvanska, a representative of a help centre for Slovak SMEs, agrees that the costs incurred, for instance for travel and accommodation while organising joint FP7 applications, are a burden on business.

EU structural funds funnelled from Brussels through national administrations are viewed as a much better bet for direct finance. But direct cash infusions from structural funds are possible only in economically less developed regions. In other, more developed regions, priority has been given to investments in areas such as networking and training that have a ‘high leverage effect’.

The aid scheme Jeremie (Joint European Resources for Micro to Medium Enterprises) aims to improve access to funding for SMEs in all EU regions. Launched by the Commission, the European Investment Bank and the European Investment Fund, the scheme allows national governments to use part of their structural fund allocations to finance small businesses through loans, equity, venture capital and guarantees. The idea is that funds should be made readily available with a minimum of red tape.

But even if the funding mechanisms themselves are improved, the EU still needs to get the message across to the SMEs that they are available.

The Commission’s directorate-general for enterprise and industry aims, through its ‘b2Europe’ initiative, to launch networks that will equip SMEs with information on help available to them. The Euro Info Centre network, set up last year, brings together more than 70 regional support organisations across Europe. Radvanska’s regional advisory and information centre in the Presov region of eastern Slovakia is part of the network.

She says: "It raises the visibility of business support institutions that are providing information to SMEs on various issues such as taxation, how to find funding partners and how to secure micro-funding. The really positive thing is that they can choose the service they need in one place."

In the mid-1990s, the Commission created a network for Innovating Regions in Europe with the aim of building economies of scale from the expertise that had been developed as a result of funding received. To date, 235 regions have joined the network.

Small- and medium-sized businesses (SMEs), the engine of European productivity and competitiveness, are an important part of EU regional policy.