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New OECD report on financing SMEs

The latest OECD report, « Financing SMEs and Entrepreneurs, » highlights the alarming surge in financing expenses confronting small businesses. Interest rates for SMEs escalated by 1.1 percentage point in 2022, up 30% from 2021, and coincided with a 2 percentage points decline in SME loan applications. Looking ahead, SMEs confront mounting pressures as bankruptcies are jumping across the globe, with a median increase of 21% in recent times.

Presenting the findings in Brussels today, OECD Director Lamia Kamal-Chaoui underscored that several SME financing sources were being impacted by the ongoing economic shocks.

“Venture capital plummeted by 16.2% in 2022, following a 60% surge in 2021. Similarly, leasing activities sustained a continued decline, dropping by 2.15% in 2022. The combination of mounting financing expenses and an increase in SME collateral requirements for loans has resulted in a drop in new lending to SMEs.”

The Report also underscores the pivotal role SMEs play in driving the green and digital transitions and their significance in fostering resilient, sustainable and inclusive growth. SMEs are instrumental in spearheading innovative solutions to the climate crisis; yet they also bear a substantial environmental burden, contributing approximately 40% of business greenhouse gas emissions in Europe. SMEs need access to sustainable finance to accelerate their net zero investments. This calls for actions by the public and private sectors to boost SME awareness and minimise their environmental reporting burden.

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