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Copy of SME

Group 5, Reporting

Giorgos Dimitriou

on 5 January 2014

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Transcript of Copy of SME

Small Medium
E n t e r p r i s e s
European elections 2014
Access to capital
Youth unemployment
alternative funding sources

How do you intend to address your constituents....
SME's Value added
declined 6-10%

SME's employment
2.5% -9%

SME's 2008-2012

The forecast
trend is even
more pessimistic

The Cyprus Case
Current financing profile
41% of SMEs are using external finance ‘core’ financial products (loans, overdrafts and credit cards)
38% invested personal funds into the business in the previous 12 months
9% of SMEs have an unresolved credit issue
Future financing appetite
Approx 12% of SMEs plan to apply for new or renew existing financing arrangements
approx 66% of those who would consider to apply for financing would consider something OTHER than the ‘core’ products of loan, overdraft or credit card
approx 70% of SMEs had no plans, or wish, to apply for finance

Banks have become more risk averse
Banks have tightened their lending criteria
Increased riskiness of SME’s
Higher collateral requirements than before
Excessive red tape

Future Funding shortcomings
Regulatory constrains
Supply for money aimed at investments will definitely not meet the demand
Conservatism will prevail over entrepreneurship
Tendency to increase reserves instead of reinvesting into business

New and alternative financing options for SME’s
private placement market for mid-market companies and SMEs to enable it to fill a gap in the market capabilities
SME loan securitisation markets as a mechanism to increase funding for smaller and mid-market companies
credit rating services for mid-market companies
credit information exchange for SMEs and mid-market companies
Access to finance
European Progress Microfinance Facility (Progress Finance)
EU grants, funds and programmes (calls for proposals)
Risk Sharing Instrument (RSI)
Regional development programmes - managing authorities
COSME approx 2.3 billion for SME's
Horizon 2020
Cohesion Policy 2014-2020: Investing in growth and jobs
What are the real expectations of the companies on future financing options?
Making existing public measures easier to obtain
Tax incentives
Guarantees for loans
Business support services
Measures to facilitate equity investments
Export credits or guarantees
Risks from alternative financing options?
generate the conditions for creating a black market for capital (technology maybe a facilitator)
capital outflow from Europe

jurisdiction issues (legal, audit, tax)

creation of new forms of uncontrolled financial products that could maybe cause a new financial bubble 
The EU addressing the alternative funding dilemma
Example: Public Constultation on crowdfunding

published 3rd of October 2013

The elements
Crowdfunding is an emerging alternative form of financing that connects directly thosewho can give, lend or invest money with those who need financing for a specific project.

It usually refers to open calls through the internet to the wider public to finance specific

Promoters of an initiative can collect funds directly; however, a web-based intermediary, a so-called ‘crowdfunding platform’, will often assist in publishing campaigns and collecting funds.
How widespread is crowdfunding in the EU?
In 2012 crowdfunding in Europe saw an estimated 65% growth compared to 2011 and reached €735 million
What is the projected evolution of crowdfunding?
That will soon exit the European venture capital market which it currently is estimated to €3 billion
Key question
DO we really need new financing mechanisms?
This infrastructure
Every Financing Mechanism..
well thought, pragmatic, forward looking, addressing real needs...
You can't prevent it from flowing
it will always find its way out!
channeling the flow may....
the infrastructure
point to the right direction.....

.....Or to the wrong direction

Being the legislators..

Thank you for your attention

Giorgos Dimitriou

Take away: traditional and conservative financing profile
Take away: SME's Seek alternative financing or no financing
Current Funding shortcomings
..consists part of the operating infrastructure of the economy
Do we need to fix the current ones?
A point that is always being neglected
The Human Capital
Talking about a voice for a entrepreneurs:
Do you really believe that especially the young people are well equiped and educated to become entrepreneurs?
Do you really believe that the only problem or even the main is the access to finance?
Do you believe that there is an adequate investment in creating a culture of SUCCESSFUL entrepreneurs in Europe?

..the choice is yours!

Congruency between the human capital and the financial capital MUST become a priority

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