SME Credit Guarantee System Support StructuresSupport Structures

Best Practices and Responses to the Financial Crisisto the Financial Crisis

Asia-Pacific Finance and Development Centre

SME Credit Guarantee Systems

in Asia-Pacific Region

H h P R Chi J 6 8 Hangzhou PR China June 16-18 2010

Lucia CusmanoLucia Cusmano

Senior Economist

Centre for Entrepreneurship SMEs and Local p pDevelopment (CFE)

OECD

The OECDThe OECD

bull An Organisation of 31 member countries committed to d d th k t democracy and the market economy

Accession countries Estonia Israel Slovenia amp Russia

Enhanced engagement countries Brazil China India Enhanced engagement countries Brazil China India Indonesia South Africa

bull A unique forum for dialogue among governments to address the economic social and environmental challenges of

l b li tiglobalisation

- compare policy experiences

seek answers to common problems- seek answers to common problems

- identify good practice

- co-ordinate policiesco ordinate policies

3

The OECD strength

bull Dialogue between member countries and non-member developing and transition economies (governments business players other stakeholders) players other stakeholders)

on the basis of OECD analytical monitoring and forecasting activityforecasting activity

The OECD is one of the most largest and most reliable f gsources of comparable statistical economic and social data

bull Research and Reviews to help governments foster prosperity and fight poverty through economic growth prosperity and fight poverty through economic growth and financial stability

Peer-reviews a countryrsquos policy in a particular areay p y pis examined by fellow members on an equal basis

Enhanced Engagement countries g g

Structured and coherent partnership based on p pmutual interest

bull Participation in OECD committees

bull Adherence to OECD instrumentsbull Adherence to OECD instruments

bull Integration into OECD statistical reporting and information systemsinformation systems

bull Regular economic surveys

P li ifi ibull Policy-specific peer reviews

5

K OECD R i ChiKey OECD Reviews on China

bull OECD Economic Surveys China 2010

bull OECD Rural Policy Reviews China 2009OECD Rural Policy Reviews China 2009

bull OECD Reviews of Regulatory Reform China ndashDefining the Boundary between the Market and the Defining the Boundary between the Market and the State 2009

bull OECD Reviews of Tertiary Education China 2009bull OECD Reviews of Tertiary Education China 2009

bull Globalisation and Emerging Economies Brazil Russia India Indonesia China and South Brazil Russia India Indonesia China and South Africa 2009

bull OECD Investment Policy Reviews China 2008bull OECD Investment Policy Reviews China 20086

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The OECDThe OECD

bull An Organisation of 31 member countries committed to d d th k t democracy and the market economy

Accession countries Estonia Israel Slovenia amp Russia

Enhanced engagement countries Brazil China India Enhanced engagement countries Brazil China India Indonesia South Africa

bull A unique forum for dialogue among governments to address the economic social and environmental challenges of

l b li tiglobalisation

- compare policy experiences

seek answers to common problems- seek answers to common problems

- identify good practice

- co-ordinate policiesco ordinate policies

3

The OECD strength

bull Dialogue between member countries and non-member developing and transition economies (governments business players other stakeholders) players other stakeholders)

on the basis of OECD analytical monitoring and forecasting activityforecasting activity

The OECD is one of the most largest and most reliable f gsources of comparable statistical economic and social data

bull Research and Reviews to help governments foster prosperity and fight poverty through economic growth prosperity and fight poverty through economic growth and financial stability

Peer-reviews a countryrsquos policy in a particular areay p y pis examined by fellow members on an equal basis

Enhanced Engagement countries g g

Structured and coherent partnership based on p pmutual interest

bull Participation in OECD committees

bull Adherence to OECD instrumentsbull Adherence to OECD instruments

bull Integration into OECD statistical reporting and information systemsinformation systems

bull Regular economic surveys

P li ifi ibull Policy-specific peer reviews

5

K OECD R i ChiKey OECD Reviews on China

bull OECD Economic Surveys China 2010

bull OECD Rural Policy Reviews China 2009OECD Rural Policy Reviews China 2009

bull OECD Reviews of Regulatory Reform China ndashDefining the Boundary between the Market and the Defining the Boundary between the Market and the State 2009

bull OECD Reviews of Tertiary Education China 2009bull OECD Reviews of Tertiary Education China 2009

bull Globalisation and Emerging Economies Brazil Russia India Indonesia China and South Brazil Russia India Indonesia China and South Africa 2009

bull OECD Investment Policy Reviews China 2008bull OECD Investment Policy Reviews China 20086

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

3

The OECD strength

bull Dialogue between member countries and non-member developing and transition economies (governments business players other stakeholders) players other stakeholders)

on the basis of OECD analytical monitoring and forecasting activityforecasting activity

The OECD is one of the most largest and most reliable f gsources of comparable statistical economic and social data

bull Research and Reviews to help governments foster prosperity and fight poverty through economic growth prosperity and fight poverty through economic growth and financial stability

Peer-reviews a countryrsquos policy in a particular areay p y pis examined by fellow members on an equal basis

Enhanced Engagement countries g g

Structured and coherent partnership based on p pmutual interest

bull Participation in OECD committees

bull Adherence to OECD instrumentsbull Adherence to OECD instruments

bull Integration into OECD statistical reporting and information systemsinformation systems

bull Regular economic surveys

P li ifi ibull Policy-specific peer reviews

5

K OECD R i ChiKey OECD Reviews on China

bull OECD Economic Surveys China 2010

bull OECD Rural Policy Reviews China 2009OECD Rural Policy Reviews China 2009

bull OECD Reviews of Regulatory Reform China ndashDefining the Boundary between the Market and the Defining the Boundary between the Market and the State 2009

bull OECD Reviews of Tertiary Education China 2009bull OECD Reviews of Tertiary Education China 2009

bull Globalisation and Emerging Economies Brazil Russia India Indonesia China and South Brazil Russia India Indonesia China and South Africa 2009

bull OECD Investment Policy Reviews China 2008bull OECD Investment Policy Reviews China 20086

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The OECD strength

bull Dialogue between member countries and non-member developing and transition economies (governments business players other stakeholders) players other stakeholders)

on the basis of OECD analytical monitoring and forecasting activityforecasting activity

The OECD is one of the most largest and most reliable f gsources of comparable statistical economic and social data

bull Research and Reviews to help governments foster prosperity and fight poverty through economic growth prosperity and fight poverty through economic growth and financial stability

Peer-reviews a countryrsquos policy in a particular areay p y pis examined by fellow members on an equal basis

Enhanced Engagement countries g g

Structured and coherent partnership based on p pmutual interest

bull Participation in OECD committees

bull Adherence to OECD instrumentsbull Adherence to OECD instruments

bull Integration into OECD statistical reporting and information systemsinformation systems

bull Regular economic surveys

P li ifi ibull Policy-specific peer reviews

5

K OECD R i ChiKey OECD Reviews on China

bull OECD Economic Surveys China 2010

bull OECD Rural Policy Reviews China 2009OECD Rural Policy Reviews China 2009

bull OECD Reviews of Regulatory Reform China ndashDefining the Boundary between the Market and the Defining the Boundary between the Market and the State 2009

bull OECD Reviews of Tertiary Education China 2009bull OECD Reviews of Tertiary Education China 2009

bull Globalisation and Emerging Economies Brazil Russia India Indonesia China and South Brazil Russia India Indonesia China and South Africa 2009

bull OECD Investment Policy Reviews China 2008bull OECD Investment Policy Reviews China 20086

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Enhanced Engagement countries g g

Structured and coherent partnership based on p pmutual interest

bull Participation in OECD committees

bull Adherence to OECD instrumentsbull Adherence to OECD instruments

bull Integration into OECD statistical reporting and information systemsinformation systems

bull Regular economic surveys

P li ifi ibull Policy-specific peer reviews

5

K OECD R i ChiKey OECD Reviews on China

bull OECD Economic Surveys China 2010

bull OECD Rural Policy Reviews China 2009OECD Rural Policy Reviews China 2009

bull OECD Reviews of Regulatory Reform China ndashDefining the Boundary between the Market and the Defining the Boundary between the Market and the State 2009

bull OECD Reviews of Tertiary Education China 2009bull OECD Reviews of Tertiary Education China 2009

bull Globalisation and Emerging Economies Brazil Russia India Indonesia China and South Brazil Russia India Indonesia China and South Africa 2009

bull OECD Investment Policy Reviews China 2008bull OECD Investment Policy Reviews China 20086

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

K OECD R i ChiKey OECD Reviews on China

bull OECD Economic Surveys China 2010

bull OECD Rural Policy Reviews China 2009OECD Rural Policy Reviews China 2009

bull OECD Reviews of Regulatory Reform China ndashDefining the Boundary between the Market and the Defining the Boundary between the Market and the State 2009

bull OECD Reviews of Tertiary Education China 2009bull OECD Reviews of Tertiary Education China 2009

bull Globalisation and Emerging Economies Brazil Russia India Indonesia China and South Brazil Russia India Indonesia China and South Africa 2009

bull OECD Investment Policy Reviews China 2008bull OECD Investment Policy Reviews China 20086

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The OECD focus on SME Development Entrepreneurship Promotion and Innovation

OECD CENTRE FOR ENTREPRENEURSHIP

Th OECD h f E hi The OECD one-stop shop for Entrepreneurship and SME Development

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

OECD Working Party on SMEs amp g yEntrepreneurship (WPSMEE)

Mission

To help member and non-member economies develop p ppolicies that

Foster entrepreneurshipp p

Facilitate sustainable growth competitiveness and skilled jobs creation and j

Help their SMEs to meet the challenge of globalisation g b

8

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

OECD WPSMEErsquos Work on SME and

bull Study on Womenrsquos entrepreneurship financing (1998)

Entrepreneurship Financing

bull Study on Women s entrepreneurship financing (1998)

bull 2nd OECD Ministerial Conference on SMEs (Istanbul 2004) ndash Workshop on SME and Entrepreneurship Financing

bull OECD Global Conference on lsquoFinancing for Entrepreneurship amp SME Growthrsquo Brasilia (2006)

ndash Study on ldquoThe SME Financing Gap Theory and Evidencerdquondash Study on The SME Financing Gap Theory and Evidence

ndash ldquoThe Brasilia Action Statement for SME amp Entrepreneurship Financingrdquo

T i R d T bl h I f h Gl b l C i i bull Turin Round Table on the Impact of the Global Crisis on SME amp Entrepreneurship Financing

ndash Report on ldquoThe Impact of the Global Crisis on SME amp p pEntrepreneurship Financing and Policy Responsesrdquo (June 2009)

bull Assessment of Government Support Measures to Facilitate SME Access to Finance in the Global Crisis (2010)SME Access to Finance in the Global Crisis (2010)

bull Pilot OECD Scoreboard on SME amp Entrepreneurship Financing Data amp Policies (2010)

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The impact of the global crisis on SMEsrsquo amp Entrepreneursrsquo access toSMEs amp Entrepreneurs access to

finance

d ff d h k hbull SMEs and entrepreneurs suffered two shocks that adversely affected their cash flows

) d ti d i fi l d d f d d i 1) a drastic drop in final demand for goods and services

2) a deterioration of credit conditions facing SMEs

bull SME s reacted by reducing operating costs by running down inventories and by cutting investment including down inventories and by cutting investment including innovation spending

bull Banks reacted by tightening credit conditionsbull Banks reacted by tightening credit conditions

bull Governments reacted by launching a series of emergency support programmesemergency support programmes

10

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Bank spreads between SME and large firms loans short and long term maturity

1 6

12

14

16

0 6

08

1

02

04

06

0

Spread between SME amp large firm loans maturity of up to 1 yearSpread between SME amp large firm loans maturity of over 1 year

Source European Central Bank 11

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

SMEsrsquo demand for credit ldquoDiscouraged BorrowersrdquoTh f th USAThe case of the USA

Source Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices released February 2 2009 12

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

SMEsrsquo and Entrepreneursrsquo Financing Trends and Needs the monitoring and evaluation

challenge

Since the onset of the crisis the assessment of its impact on SMEs and Entrepreneurs revealed that policy makers and major stakeholders (eg p y j gfinancial institutions) lack the hard data necessary toy

bull Monitor SME financing trends and needsbull Monitor SME financing trends and needs

bull Evaluate SME financing policies and programmes

13

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The OECD analytical contribution to

a) improve the understanding of business financing needs and pro ide a basis for a financing needs and provide a basis for a better informed public discussion

b) give the suppliers of finance a more comprehensive understanding of their clientsrsquo needs

c) facilitate the assessment of whether firmsrsquo c) facilitate the assessment of whether firms financing needs are met and support evaluating the effectiveness of government policies the effectiveness of government policies and programmes 14

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Assessment of Government SupportAssessment of Government Support Programmes for SMEsrsquo and

rsquoEntrepreneursrsquo Access to Finance

15

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Changes in credit conditions the view of policy makers

Changes in Credit Conditions

General Higher risk Shorter More requests f ll t l Scarcity of Hi h F

Changes in credit conditions the view of policy makers

General deterioration

Higher risk premiums

Shorter maturities for collateral

guarantees Scarcity of

working capital Higher Fees

OECD Australia Austria Belgium Belgium Canada Czech Republic Finland France G Germany Hungary Italy Japan Netherlands New Zealand Poland Turkey Sweden UK UK USA

Non OECD Israel Estonia

bull Source Country Responses to the OECD WPSMEE Questionnaire to Policy Makers on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available informationNote The ldquouumlrdquo symbol denotes that the relevant indicator was reported in the response to the Questionnaire The absence of the ldquouumlrdquo symbol only indicates that it was not reported in the Questionnaire response

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Financing conditions for SMEs the view of policy makers

o Total Credit Growth Near Zero in Most Countries

o SMEs in line with Trend Negligible or no Credit Growth

o General Deterioration in Borrowing Conditions for SMEso General Deterioration in Borrowing Conditions for SMEs

bull Higher Spreads

bull Reduced Amounts Lower Share of Amount Reduced Amounts Lower Share of Amount Requested

bull More request for Collateral Guaranteesq

bull Longer Time to Process Applications

bull Special Difficulties bull Working CapitalWorking Capital

bull Export Finance

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Selected G-20 membersrsquo policy responses to the crisis related to SMEsrsquo and entrepreneursrsquocrisis related to SMEs and entrepreneurs

financing from 2009 to early 2010 Government Loan

Guarantee Programmes Strengthening Export facilitation Guarantee Programmes Strengthening capital base and private equity and

venture capital

Direct Credit

Credit Mediation and monitoring Working

Capital (Short-term)

Investment Capital (Long-

term) Export Credits

Export Guarantees or Insurance

Increased capital of

export support

institutions institutions Australia Brazil

Canada European p

Commission

France Mediator Germany Mediator

Italy Monitor amp

collective Italy collective agreement

Japan Mexico Russia T k M di t

Source Country Responses to the OECD WPSMEE Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses follow-up launched November 2009 and publicly available information (in particular for

Turkey Mediator UK

USA Monitor

g y p p 9 p y ( p the United States)

Results are taken from the original Questionnaire on the Impact of the Global Crisis on SMEs and Entrepreneurship Financing and the Policy Responses which was launched in January 2009 and responses received in March 2009

In 2009 Australia provided extra AUD 50 million to the Export Market Development Grants which encouraged SMEs to develop export markets by reimbursing up to 50 of expenses incurred on eligible export promotion activities

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Loan Guarantees (1)Loan Guarantees (1)

bull Official loan guarantees and direct official gloans were the most widely used policy measures to increase access to financemeasures to increase access to financendash New or expanded programmes

ndash Change in nature bull Before the crisis mainly concentrated on long term

investment credits

F ll i li idit h t t bull Following liquidity shortages government increasingly supported working capital

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Loan Guarantees (2)Loan Guarantees (2)

B t f th l f t f bull Boost of the leverage factor of private and public guarantee schemes by

- raising the total counter- guaranteeg gIncreased volume coverage rate or sectoral coverage

Creation of new counter-guarantee funds

- increasing the coverage rateg g

Increased share of the loan risk that can be covered by guarantees (eg in France and Germany from 50-60 to 90)

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Loan Guarantees (3)Loan Guarantees (3)

T t b t t bull Temporary measures to boost guarantee activity

In the EUo Temporary relaxation of state aid rules to o Temporary relaxation of state aid rules to

respond to the crisis situation (higher guarantee coverage subsidised guarantee premiums etc)coverage subsidised guarantee premiums etc)

o Counter-guarantees managed by the European Investment Fund on behalf of the European Investment Fund on behalf of the European Commission (coverage of 50 of the first-level guarantee)g )

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

European Investment Fundequity and guarantees for SMEs

22Source European Investment Bank 2010

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Utilisation of Assistance ProgrammesUtilisation of Assistance Programmes

bull Heavy take-up of Official Programmes especially f W ki C i l d T d Fifor Working Capital and Trade Finance

bull Largest Users of Official Guarantees amp Direct LoansMedium-Sized FirmsManufacturing FirmsExport-Oriented Firms

bull Some Programmes heavily used by Smaller firmsMutual Guarantee Societies (MGS)Credit Mediation

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Mutual Guarantee Societies (MGS)Mutual Guarantee Societies (MGS)

bull Purely mutual schemes Beneficiary SMEs are shareholders and provide own fund via cooperative shares The entrepreneurs manage the scheme themselves

bull Private schemes Shareholders and providers of own funds are Shareholders and providers of own funds are SME organisations chambers of commerce banking networksg

operate mid-way between SMEs financial operate mid way between SMEs financial organisations public authorities

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Added Value of MGS (1)

bull SMEsldquoCulturalrdquo proximity (language and business

environment) )

Recognition of qualitative factors in risk assessment (in-depth knowledge of sector assessment (in depth knowledge of sector market technology etc)

Management support services and business Management support services and business plan analysis by third parties

Intermediary function (ldquocredit mediationrdquo)Intermediary function ( credit mediation )

Non-profit orientation

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Added Value of MGS (2)

bull Banks

Specific sectoral knowledge of SME customerSpecific sectoral knowledge of SME customer

Detailed financial file (vs use of simple and standard methods)standard methods)

Use of more qualitative criteria in the credit li i hi h l happlication which completes the more

financially-oriented analysis of the bank loan

Financial supervision and support to SMEs

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

European Association of Mutual Guarantee Societies (AECM)(AECM)

bull Pan-European Grouping of 34 MGSs or federations f MGS i 8 t iof MGSs in 18 countries

More than 2 million SMEs beneficiaries

P rogress ion of guarantee ac tivity 2002 - 2009

70 000 000

80000000 55 increase in volume of new guarantees

Ow n funds00 euro 50000000

60000000

70000000

EUR lsquo000

of new guarantees

Ow n fundsValue of guarant ees granted duri ng yearTotal value of guarantees in port folioin

00

20000000

30000000

40000000

in EU

99 of guarantees under special

2002 2003 2004 200 5 2 006 2 007 2008 20090

10000000 crisis measures for short-termworking capital loans

Source European Association of Mutual Guarantee Societies (AECM) March 2010

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Credit Mediation

bull Objective Improve information flows and use moral suasion (ie informal pressure or influence from authorities such as central banks) to encourage agreement between prospective lenders and SMEsagreement between prospective lenders and SMEs

bull Mechanismi h di li i j d b i Firms whose credit applications are rejected bring

their case before a mediation panel (usually organised by the central bank) in which the SME the organised by the central bank) in which the SME the bank and other interested parties (ie industry associations) participate

bull Advantagesremedy to information asymmetrylow cost (through existing institutions)

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Credit Mediation in France

November 2008 - 31 May 2010y

bull 25 053 enterprises had sought mediation

bull 20 607 enterprises had been accepted for bull 20 607 enterprises had been accepted for mediation

Th t f f l di ti 63bull The rate of successful mediation was 63

bull The credit mediation scheme has reinforced

11 166 firms of all sizes unblocked EUR 28 billion in credit and preserved 202 092 jobs

Source Meacutediateur du creacutedit aux entreprises June 2010

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Pilot OECD Scoreboard on SME and Entrepreneurship Financing DataEntrepreneurship Financing Data

and Policies

30

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Pilot OECD Scoreboard on SME and Entrepreneurship Financing

il i i l di

1 Canada 7 Netherlands

bull 11 pilot countries including

1 Canada

2 Finland7 Netherlands

8 New Zealand 3 France

4 Italy9 Sweden

10 Thailand4 y

5 Japan

( tl j i d)

0 a a d

11 United States(recently joined)

6 Korea

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The Criteria for Selection of Indicators

1 Availability they must be based on existing data or1 Availability they must be based on existing data or

2 Feasibility data that could be made available easily

3 Usefulness the must assist polic makers in 3 Usefulness they must assist policy makers in assessing the situation

4 Timeliness they must be produced annually or 4 Timeliness they must be produced annually or quarterly to serve as a tool for monitoring

5 Comparability they must cover the same target 5 Comparability they must cover the same target population of SMEs for the same time period target population are firms that are non-financial and independent and have at least 1 employee

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The lsquoCorersquo IndicatorsThe Core Indicators

DEBT

SME loans business loans SME non-performing loansSME loansSME loans business loans SME non performing loansSME loans

SME short term loansSME loans SME interest ratesSME gov guaranteed loansSME l

Interest rate spreads (small vs large fi )loans firms)

SME gov direct loansSME loans SME collateral

SME loans authorizedSME loans requested

OTHER

SME payment delays

EQUITY

Venture capital invested in SMEsSME bankruptcies

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Definitions of IndicatorsIndicator Definition

SME loans business loansBank loans to non-financial firms stocks or flows national definition of SME or loan amounts less thanSME loans business loans national definition of SME or loan amounts less than EUR 1 million

SME short-term loans Loans equal to 1 year or less or for working capitalAverage annual rate on new SME short

SME interest rates term loans base rate plus risk premium for maturity less than 1 year amount less than EUR 1 million

Interest rate spreads Between large and small firms for maturity less than 1 pyear

Government guaranteed loans

Guaranteed loans stock or flows from central government

SME non-performing loans SMEs non-performing loans out of total SMEs loans ()

SME Collateral of SMEs that were required to provide it on latest bank loanbank loan

Venture capital Actual amount invested in SMEs in the country

Payment delays Average number of days business to business (B2B)Payment delays Average number of days business-to-business (B2B)

Bankruptcies No SMEs legally bankrupt No per 10000 SMEs

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

KOREArsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 871 826 826

2 SME short-term loans SME loans 69 0 68 1 69 12 SME short term loans SME loans 690 681 691

3 SME long-term loans SME loans 310 319 309

4 SME government guaranteed loans (million KRW) 34 822 306 38 325 030 51 531 302

5 SME direct government loans (million KRW) 2 480 319 2 634 900 2 905 712

6 SME loans authorized requested 58 528 50

7 SME non-performing loans (million KRW) 3 445 872 7 711 192 11 146 424

8 Interest rate (average) 672 731 553

9 Interest rate spread 063 052 -013

10 Collateral EQUITY

11 Venture capital (million KRW) 991 692 724 690 316 960OTHER

12 Payment delays (days loan is past due date) 11 12 11

13 Insolvencies 27 191 047

Note Figures are for the first two quarters of 2009

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Korean Loan Growth rate 2005 2009Korean Loan Growth rate 2005-2009

800

50 0

600

700Loans to Large Corporations

300

400

500

Loans to SMEs

Loans to Households

100

200

Loans to Households

‐100

00

‐2003 6 9 12 3 6 9 12 3 6 9 12 3 6 9 12 3 6 9

2005 2006 2007 2008 2009

36Note Figure shows year on year growth rate

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

THAILANDrsquos SCOREBOARDINDICATORS 2007 2008 2009

DEBT

1 SME loans total business loans 293 279 292

2 SME short-term loans SME loans 433 444 419

3 SME long-term loans SME loans 567 556 581

4 SME government guaranteed loans (million THB) 9824 SME government guaranteed loans (million THB) 982

5 SME direct government loans

6 SME loans authorized requested 715 741 789

7 SME N f i l 7 9 6 8 9 27 SME Non-performing loans 79 68 92

8 SME interest rate 59 63 65

9 Interest rate spread 12 13 14

10 Collateral value loan value 596 151 174

EQUITY

11 Venture capital OTHER

13 Payment delays

14 Insolvencies 66

Note Figures are for the first two quarters of 2009

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Preliminary findings

bull SME loans shares in business lending declined

Th i f SME h l i d l

y g

bull The ratio of SME short -term loans increased vs long-term loans increased despite monetary easing

I t t t d i dbull Interest rate spreads increased

bull of SMEs providing collateral increased

G t t i d bull Government guarantee programmes increased with the government reducing bank risk and need for collateral and causing a substitution of need for collateral and causing a substitution of private finance by public

bull Rejection rates increasedeject o ates c eased

bull Venture capital invested declined

bull Payment delays increasedPayment delays increased

bull Bankruptcies increased

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

(In-progress) lessons for data collection and monitoring

bull Base indicators on actual transactions use opinion surveys only as supplementary

bull Harmonizesimplify data collection do not collect more collect better information

bull Include increased disclosure on bank lending practices in financial reform efforts in the area of SME lending interest rates collateral use of guarantees NPL lending interest rates collateral use of guarantees NPL require reporting by size of firm

bull Collaboration across governments and organizations to bull Collaboration across governments and organizations to produce more reliable and comparable data by size of firm

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The Way Forward

Di i h d l i l b i bull Disseminate methodological best practices to monitor SME financing needs and trends

ndash Develop a coherent set of data and indicators on SME and Develop a coherent set of data and indicators on SME and entrepreneurship financing

ndash Broaden the country scope of monitoring and evaluation

bull Strengthen the collaboration between international organizations and stakeholders in th ll ti f d t SME d t hi the collection of data on SME and entrepreneurship financing

OECD contribution to the G 20 SME Finance SubOECD contribution to the G-20 SME Finance Sub-Group

P rs e a constr cti e tri partite dialog e among bull Pursue a constructive tri-partite dialogue among governments SMEs and financial institutions which will lead to find ways and mechanisms for better will lead to find ways and mechanisms for better SME and Entrepreneurship Financing

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The lsquoBOLOGNA+10rsquo High-level Meeting on

ldquoSMEs and Entrepreneurship lessons from the global crisis and the way forward to job creation and growthrdquo

17-18 November 2010

OECD Headquarters Paris

Ten years after the First OECD Conference for Ministers responsible for SMEs Bologna June 2000

bullEnable a thorough discussion among high-level policymakers on policysuccesses and failures

bullIdentify best practices

bullStrengthen the policy dialogue and co-operation among OECD andnon-OECD economies

bull Design a roadmap for the medium to long term in the area of SMEand Entrepreneurship Policy

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

The lsquoBOLOGNA+10rsquo High-level MeetingThe BOLOGNA+10 High level Meeting

THEME A INNOVATION THEME A INNOVATION Innovative SMEs and Entrepreneurship for job

creation

THEME B FINANCINGTHEME B FINANCING

Better Financing for SMEs and Entrepreneurs

f J b C ti d G th for Job Creation and Growth

THEME C SMEs and GREEN GROWTH Promoting sustainable manufacturing and eco-g f ginnovation in small firms

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

Better Financing for SMEs and Entrepreneurs for Job Creation and Growth

ISSUES FOR DISCUSSION

bull What measures have been most effective in addressing financing constraints for business growth and job creation of

d ll fi d i h i i h hnew and small firms during the crisis What short-term measures are to be phased out

bull Has the financial crisis created additional structural impediments to SME and entrepreneurship finance and if p p p f fso is a longer term policy response required

bull How could more resilient mechanisms for the financing of SMEs and entrepreneurs be implemented within the context of a reformed financial system of a reformed financial system

5

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU

FOR MORE INFORMATIONFOR MORE INFORMATION

CENTRE FOR ENTREPRENEURSHIP SMEs amp LOCAL DEVELOPMENT(CFE)

d fwwwoecdorgcfe

Lucia Cusmanooecd orgLuciaCusmanooecdorg

THANK YOU THANK YOU