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PRESS RELEASE
Chair's Summary of the Round Table*
Turin Round Table Issues Paper
A Round Table on the Impact of the Global Crisis on SME and Entrepreneurship Financing and Policy Responses has been held in Turin, Italy, on 26 and 27 March 2009 under the auspices of the OECD Working Party on SMEs and Entrepreneurship (WPSMEE), served by the Centre for Entrepreneurship, SMEs and Local Development (CFE). This event took place at the invitation of Intesa Sanpaolo, the largest Italian Bank. The outcomes of the two-day Round Table will be a basis for the WPSMEE's input to the OECD Strategic Response to the Financial and Economic Crisis, which will feed into the processes launched by the G20, as well as the G8.
The Round table was attended by 138 participants. 37 countries/ economies were present at the event (click for details)
Background
Access to financing continues to be one of the most significant challenges for the creation, survival and growth of SMEs, especially innovative ones. The problem is exacerbated now that enterprises operate in the most severe financial and economic crisis in decades. In late October 2008 on the occasion of the 34th Session of the OECD Working Party on SMEs and Entrepreneurship (WPSMEE), policymakers responsible for SMEs and entrepreneurship held a Tour de Table on SME financing in the global crisis and engaged in a preliminary exchange of views on the impact of the global crisis. They discussed the strategies so far adopted by governments in dealing with the problem and what should be done next. The holding of this Round Table was confirmed by the WPSMEE at the end of this discussion.
Objectives of the Round Table
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To promote a tripartite dialogue between the main stakeholders - i.e., governments, representative of SMEs and entrepreneurs and financial institutions - on the impact of the crisis on SME and entrepreneurship financing, and on the policy responses needed to help SMEs and entrepreneurs weather this crisis and facilitate the recovery phase.
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To identify concrete recommendations needed to weather this impact and facilitate the recovery phase.
Issues discussed
Firstly, the financial difficulties faced by SMEs’ due to the crisis were assessed. The topics included the following:
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What factors in the financial and real economy have a major bearing on the tightening of lending to SMEs and entrepreneurs? Is it a problem of bank liquidity or risk aversion?
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Is the lack of lending a question of the decline in the demand for finance or a decline in the supply of finance; if it is a decline in demand does it apply equally to short- term finance (lines of credit) or long-term finance (investment loans).
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What is the situation in terms of equity funding (including business angel financing, public and private venture capital funding and mezzanine finance) for SMEs and entrepreneurs?
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What is the impact of the credit crunch on SMEs’ and entrepreneurs’ business activities, in particular on their investment plans?
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How can data on SME financing both demand and supply be best improved? Are there examples of timely and meaningful data collection and publication (Canada, UK, US)?
Secondly, the immediate policy responses to help SMEs were discussed in order to identify good practices. The topics included the following:
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What are the measures adopted to maintain bank lending and equity funding for SMEs and entrepreneurs in the short term and what are the policies aimed at the long term? What policies are working and which are not?
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In the present crisis, loan guarantees appear to be the most widely used policy measure to address the issue of lending to SMEs. However, banks seem to be rather reluctant to use these schemes. What are the reasons and what could be done?
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Will the resolution of SME liquidity problems, lead eventually to insolvency problems? If so, what is the best way to restore demand for SME products and services? How could stimulus packages be used to ease the demand shock for SMEs?
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With stimulus packages to address the crisis being adopted by many countries, what is the size of the package(s) specifically aimed at SMEs and entrepreneurs that governments have provided ?
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How can long-term growth and innovation be promoted by the production and consumption of more sustainable products and services and what assistance could be provided to SMEs to take advantage of these new opportunities and invest in producing energy efficient, environmentally-friendly, hi-tech products and services?
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What business development services could be supported temporarily to assist SMEs in overcoming their cash flow problems and in taking advantage of new opportunites in the stimulus packages?
For presentations and speeches, click here
Output
A summary by the Chairs of the meeting has put forward a series of findings and proposals to facilitate SME and entrepreneurship financing in the context of crisis and foster the recovery. It will be a basis for the WPSMEE's input to the OECD's Strategic Response to the Global Financial and Economic Crisis which will feed into the G20 process as well as the G8.
*The Round Table was co-chaired by Mr. Jacques Augustin, Chair of the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) and Mr. Salvatore Zecchini, Chair of the OECD WPSMEE Informal Steering Group on SME and Entrepreneurship Financing.
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