Access to finance is crucial

Foreword by Markus Ferber MEP, Vice-Chair of the Economic and Monetary Affairs Committee, European Parliament, EPP

Markus Ferber MEP If you want to see innovation, technological leadership, growth and down-to-earth management, take a closer look at the very heart of the European economy: small and medium-sized enterprises (SMEs).

Many SMEs do not have the shiny commercial and glossy publications we see produced by the big multinationals, but nonetheless they are the everyday heroes of the EU economy. They are bold, they take risks and they grow.

This edition of 1000 Companies to Inspire Europe makes it very clear that if you want to see jobs, growth and investment happening, then big government spending plans are not the answer: you should be looking instead at empowering entrepreneurial spirit and encouraging the SMEs where that entrepreneurism is most usually found.

Encouraging entrepreneurial spirit via a smart and sound legislative framework is the foundation for making SMEs thrive. But the one ingredient that truly makes the difference is finance. If access to finance is missing, it can hold back the company with the smartest business plan. But if it is there, it can make all the difference between a couple of smart students working in their parents’ garage and being the next world leader in an industry that has not even existed before.

If there is no realistic access to finance, innovation will be held back, competition will be held back and progress will be held back. Therefore, access to finance for SMEs is key.

While the goal is clear, the path to getting there is a difficult one. There is no one-size-fits-all solution. While a standard bank loan might work well for many SMEs, it can be very hard for innovative start-ups to obtain such a type of financing.

It also might not be enough for rapidly growing medium-sized businesses which are on the brink of international expansion. SMEs are likely to need different financing solutions across different parts of their lifecycle, and they need experienced partners like LSEG which are able to help with navigating the pitfalls along the journey – from crowdfunding to initial public offering.

The European Parliament is fully committed to making SME financing work. Dedicated SME Growth Markets in MiFID II, a lighter prospectus regime and more favourable capital requirements for banks’ SME exposures are hard proof of that.

The next big project will be finishing the Capital Markets Union (CMU). The European Parliament is committed to making European financial markets more efficient, more transparent and more resilient. To that end, the ECON Committee in particular is looking forward to ambitious proposals from the European Commission – not least for
the sake of SMEs.