The share of SMEs experiencing problems with access to finance in Hungary exceeds the EU average: 29% versus 21% (Annual Report on EU SMEs 2009). ECB data indicate that Debt financing is a widely used form of accessing external sources of finance. ECB data indicate that in 2010, the volume of loans reached 3,4% of the country’s GDP and loans were granted with an average interest rate of almost 9% (being much higher than EU average of 5,05 %. The availability of venture capital both in the early and expansion stages is below the EU average. Data from EVCA reveal that in 2010 there were 19 venture capital investments in 17 companies amounting to 0,18% of the country's GDP, very close to EU average.
The Small Business Act (SBA) Fact Sheets suggest that Hungary performs in line with the EU average with regard to access to finance for SMEs. On financing through private bank loans, most indicators (that is, banks’ willingness to provide loans, the interest rate differential between smaller loans of less than EUR 1 million — mostly for SMEs — and larger loans) are on par with the EU average. The share of unsuccessful bank loan applications by SMEs is substantially lower in Hungary (12%) than in the EU in general (23%). The only slightly problematic result in this section is on access to public financial support, including guarantees, where a higher share of Hungarian firms (31% versus 22%) firms reported deterioration in the situation. The cash flow situation also seems to be in line with the EU average: Hungarian enterprises get paid more than two weeks earlier than their EU counterparts (38 to 54 days) and the share of lost payments is almost identical (2,78%) to the EU average. The strength of legal rights and the depth of credit information, conditions that support creditor confidence in lending to enterprises, are in line with the conditions elsewhere in the EU. Access to venture capital, however, appears more difficult in Hungary than in the rest of the EU.
The situation on the share of EU-supported structural and regional funds dedicated to financing businesses is less straightforward. The share of structural funds is clearly below the EU average (3,35 compared to 9,5 % in EU) but the share of EAFRD funding outstrips it by a wide margin (5,91 in Hungary compared to 2,86 % in EU) as reported in Annual Report on EU SMEs 2009.
Research, articles etc.
|Key indicators on access to finance|
Hungary performed below the index reference point (the index value for the EU as a whole in 2007) for the entire analysed period. The evolution of the index shows an indirect correlation with the interest rate indicators.
For details regarding the composition of the SMAF index and the methodology of compiling it please click here.[32 KB]
Over the analysed period the peak in the lending activity as measured by the loans volume was reached, like elsewhere in the EU, in 2009, year in which the amount of loan guarantees also reached its maximum. The reduction in interest rates starting from 2009 was not accompanied by a rise in loan volumes in 2010 and most likely also in 2011, which might point out to a weakening in the demand for loans. The chart is based on data compiled by the ECB.[64 KB]
EVCA-produced data indicate a dramatic decline in the volume of VC investments in 2009, followed by a marked revival of the market in 2010. It is worth noticing the positive evolution of investments in seed and start-up companies, which reached in 2010 a level substantially higher than in all the other analysed years.[65 KB]
|Business angels finance|