SMEs debt financing in the EU: on the eve of the coronacrisis

  • Received May 31, 2020;
    Accepted June 23, 2020;
    Published August 19, 2020
  • Author(s)
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  • Article Info
    Volume 15 2020, Issue #3, pp. 81-94
  • Cited by
    14 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

SMEs are the main drivers of economic development. As the debt crisis and coronavirus crisis show, despite their importance, they are extremely sensitive to economic downturns. Therefore, SMEs need to be supported through various tools. The paper is aimed at evaluating the SMEs’ bank and governmental support in the northern and southern EU countries in two crisis periods and assessing the financial state of SMEs on the eve of coronacrisis using micro-level data.
It was proved that bank loans and credit lines remain the main sources of SMEs’ financing. After the debt crisis, banks are becoming more loyal to SMEs.
It was proved that SMEs from the northern EU countries suffered less from the previous crisis and therefore started their recovery earlier than the southern ones in terms of profitability, liquidity and debt burden. In addition, it was shown that both groups on the eve of the new turbulence period were in better financial state compared to the previous debt crisis.
The southern EU countries suffered more from both crises. At the same time, due to effective governmental support and bank loyalty, their SMEs entered the coronacrisis at the same level of financial stability as the northern ones. Since the new support measures are concentrated primarily in the banking sector through loan guarantee schemes and reduced interest rates, it is essential to provide debt financing to high-quality borrowers and avoid the debt crisis in southern counties.

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    • Figure 1. Dynamics of interest rates on loans to SMEs (2007–2018)
    • Figure 2. SME loan rejection rates from 2007 to 2018
    • Figure 3. Change in GDP volume (percentage change compared to 2020)
    • Figure 4. Liabilities-to-equity ratio (2006–2018)
    • Figure 5. Current debt-to-total assets ratio (2006–2018)
    • Figure 6. Cash-to-total assets ratio (2006–2018)
    • Figure 7. EBITDA/Net turnover (2006–2018)
    • Table 1. Main sources of SMEs financing in the EU countries in 2018, %
    • Table 2. The share of SMEs in all outstanding business loans in different EU countries, 2018, %
    • Table 3. Ways of government support for SME’s access to finance in EU countries (debt crisis period)
    • Table 4. Response of analyzed countries to COVID-19
    • Table 5. Indicators and formulas
    • Conceptualization
      Yevheniia Polishchuk, Anna Kornyliuk
    • Data curation
      Yevheniia Polishchuk, Anna Kornyliuk, Inna Lopashchuk, Alina Pinchuk
    • Funding acquisition
      Yevheniia Polishchuk, Inna Lopashchuk, Alina Pinchuk
    • Project administration
      Yevheniia Polishchuk
    • Resources
      Yevheniia Polishchuk, Anna Kornyliuk
    • Supervision
      Yevheniia Polishchuk
    • Writing – original draft
      Yevheniia Polishchuk, Anna Kornyliuk, Inna Lopashchuk, Alina Pinchuk
    • Writing – review & editing
      Yevheniia Polishchuk
    • Formal Analysis
      Anna Kornyliuk, Inna Lopashchuk, Alina Pinchuk
    • Methodology
      Anna Kornyliuk
    • Software
      Anna Kornyliuk
    • Validation
      Anna Kornyliuk, Inna Lopashchuk
    • Visualization
      Anna Kornyliuk, Alina Pinchuk
    • Investigation
      Inna Lopashchuk, Alina Pinchuk