In the spotlight: Financing European SMEs

In this special report, Euromoney investigates the challenges facing SMEs in Europe’s biggest markets, and looks at lessons that could be learnt and applied across the region. What can be done to encourage banks to lend? Which countries have the best capital market solutions? Can the state play a positive, proactive role?

Allegations against RBS’s treatment of struggling small and medium-sized enterprises have once again cast a harsh light on banks’ treatment of these companies. While banks deal with zombie borrowers and tout loans at fat margins to stellar SME credits that don’t want them, it is SMEs in the middle ground that need more help.Peter Lee and Louise Bowman report

Much of the funding of Germany’s economically vital SMEs continues to come from bank loans. Private placements and specialized bonds are of growing importance, but sometimes problematic from a risk point of view

Lack of SME demand for funding might have been exaggerated. But many of those that seek funds might be risky prospects

An above EU average number of SMEs do not require funding beyond their own sources; the smaller number that do are facing above EU average difficulty in getting bank loans

Financing for SMEs in the Nordic region is readily available and growing, driven by well-capitalized and domestic-focused banks. Capital-market funding solutions are growing as well

Portugal’s economy is heavily dependent on SMEs. The minority that are exporters are still borrowing at favourable rates; the remainder are deterred by the weak domestic economy

The development bank has increased its capacity to lend and broadened the range of its corporate borrowers

There is no shortage of demand and supply for SME funding; of more concern are attacks on corporates from the left

Political imperatives are driving the background noise to UK SME finance. But the companies themselves don’t seem to be listening