Small and medium enterprises, SMEs are the backbone of the member states’ economies: they represent over 95 percent of all entrepreneurship’s activities (about two-thirds of the total employment in the private sector) and create about 85 per cent of new jobs. However, recently SMEs have been under severe stress; besides, most of them are “turning digital” – the process entailing several problems.
The EU socio-economic and political guidelines, as well as governance in most of the member states, consider SMEs (and entrepreneurship, in general) as a key to ensuring economic growth, innovation, job creation, and social stability. However, several global and European challenges have been constantly breaking the spirit of certainty, hope and trust among entrepreneurs; e.g. during and after the COVID-pandemic the urgency of tackling these issues has been a vital obligations for the national governance.
More on SMEs in: https://ec.europa.eu/growth/smes/business-friendly-environment/sme-definition_en
Already two years ago, i.e. amid pandemic crisis, the Commission has adopted a “Coronavirus Response Investment Initiative” with an idea of direct support for citizens, jobs and businesses in the amount of € 37 billion to mitigate the impact of the crisis. Besides, for the first time in the EU’s history, there was a unanimous decision to activate the general “escape clause” in the Stability and Growth Pact: it means that the member states can use all the firepower they have to support citizens and all kind of businesses during these tough times.
Source: Commission President Speech on March 26, 2020 at: https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_20_532
Specifically, the Commission has been fast-tracking and promoting research on post-COVID effect on corporate activities by mobilizing financial support in the following priority directions: € 47.5 million in 17 projects for vaccines and treatment; € 90 million in public and private funds for therapeutics and diagnostics; and € 164 million for SMEs and startups for innovative solutions to tackle the posy-pandemic consequences.
EU’s support for businesses
European efforts to support SMEs, in particular during and in post-pandemic period, have taken various forms with the following general approaches in stimulating the “spirit of entrepreneurship” in the member states:
= Creating business friendly environment. According to the ideas of the “Small Business Act for Europe” (so-called SBA), which included a comprehensive guide the SME policy in the member states, the EU promotes the “think small first” principle and entrepreneurial spirit in the states’ governance. Among other SBA’s priorities are: less regulatory burden for SMEs, better access to finance, radical assistance in entering global markets, etc.
More on “Small Business Act” in:
= Promoting entrepreneurship. In line with the proposals in the EU’s Entrepreneurship Action Plan, the member states acquire support for entrepreneurship education and creating additional tools to aspire SMEs and entrepreneurs.
More on promoting entrepreneurship in:
= Improving access to new markets. The EU efforts are to ensure that enterprises in the states can work in a business friendly environment and make the most out of cross border activities, both within the EU Single Market and outside the EU. However, only about 25% of the EU-based SMEs (or about 5 million companies) presently are involved in export activities and even smaller portion of them export beyond the European region. Therefore, the Commission aims to help SMEs “facing” competition, access foreign markets and find new business partners abroad; going international increases SMEs’ performance, enhances competitiveness, and reinforces sustainable growth. With this in mind, the Commission has created a special “business portal”, which includes a practical guide to “doing business in Europe” and supplying entrepreneurs with information and interactive services that help them expand business abroad.
More on “Your Europe Business Portal” in: https://europa.eu/youreurope/business/index_en.htm
More on SME internationalization in: https://ec.europa.eu/growth/smes/access-to-markets_en
= Facilitating access to finance. The issue has become the most pressing for SMEs; numerous EU institutions are working on improving their financing situations by providing information on available funding opportunities: for example, the “Late Payment Directive” strengthens businesses’ rights to prompt payment. Presently, the following financial instruments are used to mitigate SMEs problems: loans and guarantees, venture capital, business angels, growth stock markets, crowd funding and fintech/blockchain.
More on access to finance in: https://ec.europa.eu/growth/access-to-finance_en
= Supporting SMEs through competitiveness and innovation. This line of activity represents one of the key aspects of the EU’s policy in relation to industry and enterprise, in particular for SMEs. On industrial competitiveness in: https://ec.europa.eu/growth/industry_en#competitiveness; On general start-up information in: https://startupeuropeclub.eu/guide/?box=startup; On innovation in: https://ec.europa.eu/growth/industry/policy/innovation_en
Innovative approach to corporate activity
The EU institutions provide assistance to SMEs in following various innovative approaches: thus, a “Fast Track to Innovation (FTI) is a specific measure in Horizon 2020 program to promote “close-to-the-market” innovation activities open to all types of SMEs. In this way the FTI can help reducing the SMEs’ time from an idea to the market and to increase the participation in Horizon 2020 funds for the “first-time industry applicants”.
FTI also aims to nurture trans-disciplinary and cross-sector approaches: i.e. all innovators are stimulated to cooperate in developing sustainable innovative solutions. In this way, with the EU’s financial support, modern EU’s business is becoming innovative: EU’ maximum contribution is of €3 mln per proposal with time-to-grant (from the cut-off to the signature of the grant) of around 6 months.
More on industrial technologies in: https://ec.europa.eu/programmes/horizon2020/en/h2020-section/leadership-enabling-and-industrial-technologies
Proposals for funding must be submitted by a group of SMEs from at least three-five legal entities established in at least three different EU states or countries associated to Horizon 2020 program. Each “group” must either allocation of at least 60% of the budget to participants’ activity or the group must include a minimum of two industry participants in a group of three or four partners, or three industry participants in a group of five partners.
No doubt, innovative approach is important; at the same time modern online trends in corporate activities (instigated by the pandemic in the first part of 2020) have shown that all sectors of entrepreneurship are subject to “digital technologies”. In short, the whole entrepreneurship has turned into a “business technology”, including education and training.
The EU’s specific support is rendered to start-ups and scale-ups in the states; this initiative is to provide innovative entrepreneurs every opportunity to become European and world leading companies by bringing together the EU funds to focus on venture capital investment, lax insolvency procedures and taxation, to name a few.
More in Commission communication on start-ups and scale-ups:
General link for these issues: https://ec.europa.eu/growth/smes/; in particular, on tourism: Eteris E. Tourism in the World, Europe & the Baltics. In:
There are some examples of tackling the SMEs problems from other European funds: e.g. the King Baudouin Foundation and FXB association have developed an approach that mixes training, personal and material support. It also measures the impact and use of findings to make appropriate modifications in cooperation with partners.
More about the project: https://www.kbs-frb.be/ and a newsletter in: https://www.kbs-frb.be/en/Newsroom/Stories/20200129AJ2?utm_source=newsletter&hq_e=el&hq_m=6018745&hq_l=4&hq_v=0ec8ea7c9a
Collaborative or sharing economy is regarded as a new impetus for growth in a great variety of SMEs in Europe: e.g. such activities are ranging from sharing houses, cars including journeys and other domestic services. But it is more than just providing new facilities for citizens and innovative entrepreneurs; sharing economy changes the traditional connections (and often tensions) between the new service providers and existing market operators.
Main actions here in the member states are towards encouraging the development of new and innovative services, the temporary use of existing assets, while ensuring adequate consumer and social protection.
Additional information on the European support for states’ SME-networks is in the following web-links: = Your Europe Business Portal (with a practical guide for doing business in EU and providing information on expanding business abroad); = Enterprise Europe Network (it helps SMEs in access to market information, overcoming legal obstacles and finding potential business partners in EU); = SME Internationalisation support, providing information on foreign markets and helping European SMEs in internationalizing activities; and = portal on Access to Finance, which helps SMEs finding financial supported from the EU sources.
More in: https://ec.europa.eu/growth/access-finance-smes_en