SMEs struggle to navigate Europe’s funding landscape, according to new AFME guide

Published 
  • Europe’s SMEs are finding it difficult to raise equity capital and there is a significant lack of awareness about the funding options available to them;
  • AFME has released the first pan-EU Guide to help SMEs identify and access funding opportunities.

European small and medium-sized enterprises (SMEs) have access to nearly twice the amount of funding as their US counterparts, yet bank loans remain the most common form of SME finance in Europe. This leaves huge scope for small businesses to tap additional funding sources for loans, bonds and equities, finds new research by the Association for Financial Markets in Europe (AFME). However, many SMEs remain unaware of the options available to them.

In Spain and Italy, for example – where small businesses tend to lean most heavily on financing sources, such as banks – Italian SMEs received €233 billion in loans in 2013 compared to just €1 billion in private equity capital. While in Spain, SMEs received close to €273 billion through bank loans compared to less than €1.5 billion from venture capital and private equity sources.

With a view to helping European SMEs decide what type of funding their business needs, AFME has released the first pan-European guide entitled: “Raising Finance for Europe’s Small & Medium-Sized Businesses: A practical guide to obtaining loan, bond and equity funding”. The Guide provides a comprehensive overview of the financing options available, including practical tips on where and how to access funding.

Simon Lewis, Chief Executive of AFME, said: “SMEs are at the heart of the European economy and are a key driver for economic growth, innovation and employment. By understanding the diverse funding sources available to them, European SMEs will be better able to grow and create employment. In this respect, we hope the Guide will help facilitate decision-making on critical funding choices.”

In order to encourage European SMEs to think more creatively about their financing options, AFME’s Guide explains the main types of SME finance available, namely loans provided by banks and non-banks, bonds and equity finance. It introduces sources, such as venture capital, private equity, peer-to-peer lending platforms and crowd funding websites. It also includes an extensive directory of national and pan-European organisations and schemes which provide SME support, and offers practical case studies. The Guide also provides a comparison of stock exchange requirements and issuance data for equity and bond markets across Europe.

George Passaris, head of securitisation at the European Investment Fund said: “The AFME Guide will help European SMEs make educated choices about the type of funding they need and will help to improve their chances of achieving success with loan applications and bond and equity fund-raisings. It includes a useful overview of the financing programmes available from the EIF, EIB and other European institutions to support the growth of European SMEs.”

Gerhard Huemer from the EU SME Association UEAPME, who supported the work on the Guide, said: “Especially in times when many SMEs have difficulties with access to finance, this Guide helps SMEs to learn about the full range of financing sources and how to profit from them.”

AFME and its wholesale capital markets members are the link between businesses of all sizes and a broad range of investors. As such, AFME is uniquely placed to gather their expertise – and that of other organisations across Europe – to provide new ideas to all European companies looking to understand what type of capital they need.

AFME’s support for SMEs is part of a wider collaborative effort to improve economic and employment growth in Europe, driven by the European Commission. This growth agenda includes the recently announced Capital Markets Union and the Investment Plan for Europe which includes the €315 billion European Fund for Strategic Investments.

AFME members have already begun distributing the Guide to their SME clients across Europe.

Raising Finance for Europe’s Small & Medium-Sized Businesses is available in English, French, German, Italian and Spanish on the AFME website >>

Most recent episodes

What’s on the Horizon for Short-term Investments?

The treasury community has risen to the ongoing challenge of rising interest rates and inflation, with corporate cash serving as the sought-after safety net. Here, Daniel Farrell (Northern Trust Asset Management) and Karl Adams (ICD) consider how the latest MMF reform proposals affect short-term...

Transitioning a Corporate from LIBOR to CME Term SOFR

The loans market has predominantly moved to forward looking term rates, and both corporate borrowers and global lenders are increasingly turning to CME Term SOFR as the forward looking risk-free benchmarks to support their activities. Listen to this podcast, featuring Gavin Lee, Marco Bianchi (CME...

37:16

HSBC’s Sibos Spotlight – View from Sibos

TMI's Eleanor Hill invites Neil Atkinson, Nadine Lagarmitte, and Vinay Mendonca (HSBC) to discuss the critical treasury topics and conversations highlighted at this year's Sibos conference in Amsterdam. Amongst a wealth of market insights, our guests consider the most critical developments emerging from...

38:40

ECB’s Targeted TLTRO Tweaks Set to Drain Excess Market Liquidity

Welcome to the latest edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 7th...

05:42

Asian Treasury Trends: Learnings and Opportunities

Former corporate treasury professional, Valerie Heng (Deloitte) joins Eleanor Hill to discuss the hot topic of treasury transformation, alongside other key shifts treasurers should be aware of. In this podcast, Valerie uses her knowledge of the Asian Treasury market to explain how the role of the...

20:27

Collaborative Trade Finance: How to Unlock Liquidity at Speed

Imagine if trade finance applications were fully collaborative and corporates could communicate with every trade participant via an open digital hub.  In this podcast, Vincent Almering (Interfood Holding B.V.) and Enno-Burghard Weitzel (Surecomp) explain to TMI's Ben Poole how collaborative trade...

35:54

Critical Trends in Trade and Supply Chain Management

Three trade finance experts from Societe Generale join Ben Poole (TMI) in the virtual TreasuryCast studio to discuss critical developments in the trade space that are particularly impactful to corporate treasurers. In this podcast, Isabel Santos, Ariel Emirian and Pierre-Antoine Barreault (Societe...

21:32

Citizen Development: The New Productivity Engine for Corporate Treasurers

‘Citizen development’ is about encouraging non-IT professionals to learn software development skills. Here, Dor Haim (Kryon) questions whether, with the roll-out of low-code platforms, treasure...

07:09

Managing the Impact of Rising Interest Rates and Inflation

With interest rates rising as central banks try to contain inflation, a difficult balancing act is in progress. The responses of the various monetary policy committees are being watched with a keen eye by treasurers the world over as they consider their next actions. Tarek El-Yafi and Karen Hom (Standard...

08:21

Community Impact: Cash and Fixed Income Investing for Good

CNote is a tech-enabled impact investment platform – and a means for finance to be used as a “tool for economic justice”. Its focus on diversity, equity, and inclusion helps corporate and institutional investors use their capital to strengthen underserved communities.  Catherine Berman (CNote)...

13:37