The Small Business Act (SBA) Fact Sheets reveal that Estonia's overall performance is positive, and is actually above the EU average. The indicators that have proved most fluid include the willingness of banks to provide loans, which has improved more than twice to 17%; this could be an indication that the previously unfavourable conditions present in Estonia have been changing on hopefully what might prove to be a way out of the crisis. A significant improvement has also been noted in the category Access to public financial support, including guarantees where Estonia is performing much better than the EU average, with only 12% as compared to 22% of those respondents in the previous year that reported a deterioration. The third indicator that is directly connected to private credit is the cost of that credit, more particularly the premium that small businesses have to pay relative to large businesses, due to their higher risk ratings. This gap has fallen to almost a half, and small businesses in Estonia pay about 13% more in interest compared to large businesses, while their EU peers pay 19% more.
Due to easier access to public financial support, the number of rejected applications for bank loan applications has fallen to a quarter (still a lower performance than in the rest of the EU), as opposed to the year before, when almost half of the applications were unsuccessful. As bank loan volumes were quite low in 2011, banks subsequently started to compete for customers, which could explain the falling cost of borrowing and the smaller number of failed applications.
On the policy front, access to finance has been one of the areas where the most significant change has been noticed. A new technology loan with the involvement of Kredex was launched to cover up to 40% of the self-financing (the maximum amount being 2 million) requested by a bank. The aim is to improve the productivity of enterprises and internationalization. A number of amended policy measures were also introduced with the aim of making it easier for SMEs to have access to finance, but also to provide other services to assist new start ups, such as free counselling services, export guarantees and insurance.
Research, articles etc.
|Key indicators on access to finance|
Source: Chart compiled using ECB data
Note: Loan volumes and interest rate data for 2012 are to the period September 2012 only (due to data availability as at November 2012).
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Source: Chart compiled using AECM data
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Source: Chart compiled using EVCA data
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Appendix: ACTIONS SUPPORTING ACCESS TO FINANCE FOR SMEs (PDF) [284 KB]