ACCA

Access to finance for SMEs during the economic recovery is a very relevant issue as we start to move tentatively out of the recession.

The prediction of reduced credit will affect the availability of finance for SMEs. This is a critical issue for the recovery of European economies.

The issue about access to finance was discussed at a recent ACCA (the Association of Chartered Certified Accountants) and the City of London’s jointly organised breakfast meeting on 7 October 2009 entitled “Access to Finance: How will SMEs raise finance during the economic recovery?”, during which the panel presented the points of view of the service providers, the users, the facilitators and the regulator.

Discussions highlighted that the latest statistics from the EU barometer indicate there has been a small improvement in accessing finance.

According to Professor Robin Jarvis, ACCA head of SME Affairs, the two influential aspects in examining problems with access to finance are the size of the SME and the type of activity/services they deliver.

The diverse situations within the EU Member States’ banking system is critical, especially when coupled with the fact that responsible lending lead banks to focus on viable projects when approving a loan.

Public support is strongly needed to help innovative projects, develop new products and to expand other forms of financing that could carry more risk such as equity and venture capital, as well as the incentives –such as tax reliefs- that should accompany them. Also, governments should study best practice examples regarding loan guarantee schemes and work towards building a framework of business angel networks, while looking at the impact of the Capital requirement and late payment on end-users.

Finally, it should be stressed that IFRS for SMEs, which can be difficult to implement, could enable small businesses to raise equity and venture capital, and that accounting requirements for micro-entities help to ensure transparency, demonstrating the good management of a company.

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