Analysis of SME Segment Lending Processes in Light of Credit Guarantees in the European Union

Abstract

Funding as a problem has ranked much lower on the list of SMEs’ most daunting challenges since 2011, according to the ECB’s SAFE survey. The accommodative monetary policy of the central banks in advanced markets coupled with the low interest rate environment has contributed to the fact that financing conditions have been considerably relaxed at global level since 2010. In the EU, 80–85 per cent of SME borrowing is realised through bank loans, thus entailing the risk that companies’ access to finance may be constrained in conditions of financial turbulence, which threatens the development of productivity. Increasing the role of credit guarantees is an important tool in mitigating the impact of these trends, and it assists financial institutions in helping the SME sector with funds in a recession with greater certainty and lower risk.