CMU and SMEs Erich Kühnelt Wirtschaftskammer Österreich (WKÖ) Austrian Federal Economic Chamber - QED

CMU and SMEs
Erich Kühnelt
Wirtschaftskammer Österreich (WKÖ)
Austrian Federal Economic Chamber

Wirtschaftskammer Österreich (WKÖ)

Austrian Federal Economic Chamber

 public law chamber with currently 500.000 members
 members: more than 99 % are SMEs, also financial sector
  and big companies.
 represents interests of members, gives advice and offers
  services to members
 social and economic partner in Austria
 more than 110 offices all over the world
 2 offices in Brussels (representation at EU and Belgium)
 member of UEAPME and Eurochambres

Financing of Investments by Austrian SMEs 2009 - 2014

        Cash Flow and Own Equity are the most important financing sources of SMEs.

                                           Prozent der Auskunftspersonen

                                    2014             23,5                              42,2                              23,6                     3,8    6,9

                                                                                                                                                                     (Basis: nur Betriebe mit größeren und mittleren
                                                                                                                                                                      Investitionen 2009/2010/2011/2012/2013/2014)
                                    2013              26,3                               40,4                           18,2                7,7         7,4

                                    2012              25,5                                44,1                           15,9               5,4         9,1

                                    2011             25,1                                     48,4                             13,4           6,6        6,5

                                    2010              25,6                                45,8                               14,6            7,2         6,8

                                    2009               28,9                               37,0                      15,9              6,8           11,4

                                        0%                    20%                40%                    60%                    80%                            100%

                                              Bankkredit      Cash Flow    eingebrachtes Eigenkapital     Förderungen        sonstige Finanzierungen

"Wie erfolgte die Finanzierung der von Ihnen im letzten Jahr durchgeführten Investitionsvorhaben?"
                                                                                                                         3

Current and planned use of financing alternatives

        24 % of SMEs plan to finance their investments by financing alternatives (28 % of young businesses)

                                      current                                                     planned
2014
                                Prozent der Auskunftspersonen                                Prozent der Auskunftspersonen

                       Gesamt 6,6                        93,4                                    24,0                    76,0

                Gründungsjahr

                  2011 bis 2015 9,1                      90,9                                    28,0                        72,0

                2010 und früher 5,6                      94,4                                   22,3                     77,7

                              0%        20%        40%      60%     80%      100%          0%          20%        40%   60%          80%     100%

                                              ja                  nein                                       ja                     nein

"Haben Sie während der letzten 3 Jahre alternative Finanzierungsformen wie z.B. Venture Capital, Mezzaninkapital, stille Beteiligungen,
Mitarbeiterbeteiligungen, Business Angels oder Crowdfunding für die Finanzierung ihres Unternehmens genutzt?" || "Und wollen Sie künftig
alternative Finanzierungsformen wie Venture Capital, Mezzaninkapital, stille Beteiligungen, Mitarbeiterbeteiligungen, Business Angels oder
Crowdfunding für die Finanzierung Ihres Unternehmens nutzen?"

n = 1847 (444/1403)                                                                    Strukturbefragung | Unternehmensfinanzierung 2015 | Seite 4

USA: SME-finance situation similiar to EU
(except higher importance of credit card financing)

 Primary funding types used by SMEs (less than 500 employees)
               35%

               30%

               25%

               20%

               15%

               10%

                5%

                0%
                     Personal   Retained   Credit     Loans,     Equity    Leasing   Trade
                     savings    earnings   cards     lines of investment             credit
                                                    credit and
                                                    mortgages

 Source: Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia,
 Joint Small Business Credit Survey Report 2014, updated February 2015

CMU from the SME perspective

 Difficult access to finance for many SMEs
 banks capacity (and readiness) to lend to SMEs is limited
 SMEs are very interested in alternatives to bank loans, but
      most SMEs cannot deliver the return the investors expect
       (exception: impact investing)
      information gaps, sometimes wrong expectations
 Innovation finance: banks do not finance more risky
  projects (or only when sufficient collateral is provided)
      Innovation is needed in Europe to sustain and strenghten
       competitiveness, create employment and tackle climate
       change (Europe2020)
 Overreliance on debt raises financial stability issues

Priorities

 Reduction of crossborder barriers for risk capital (fund
   raising and investment)
 Obstacles in regulation (AIFM-D, financial regulation)
 „Level playing field“ in taxation (debt bias in taxation)
 Differing national regulations concerning crowdfunding
   (e.g. some member states see peer-to-peer lending as
   banking business, other MS and EBA disagree)
 Prospectus Directive
and
Regulation should not further impede banks to do business
with SMEs (Basel IV-discussion); cumulative impact analysis of
regulation.

further topics

 Securitization: good idea, but costs for SMEs should not
  rise through intermediation.
      entrepreneur wants to know creditor
      viable without public support?
 Capital requirements for institutional investors investing
  in PE/VC-funds and PE/VC-fund-of-funds?
 EU-funds for European VC-funds/fund of funds – details?
 Exemption for credit unions from capital requirements:
  range of exemption? (other small regional institutes?)
 Basel IV – treatment of SME loans
 feedback of banks on credit decision (Art 431 (4) CRR)

Conclusion

 Action Plan sets an ambitious agenda and generally sets
  the right priorities
 Member states commitment is crucial (e.g. national
  initiatives to support risk capital, tax incentives)
 Many SMEs cannot meet risk capital investors expectations
  on return on investments or do not want capital from
  outside investors (except family and friends)
 focus must be on access to risk capital and loans (external
  finance), taxation affects internal finance (own equity)
 Information, training and other services by chambers and
  SME associations on investment readiness and other
  finance topics are important

thank you for your attention

Erich Kühnelt
Wirtschaftskammer Österreich
Austrian Federal Economic Chamber
Dept. for Fiscal, Financial and Trade Policies
Tel. +43 5 90 900-3739
e-mail: erich.kuehnelt@wko.at