The decision to offer support for SMEs came as part of a wider fiscal stimulus package representing "about 1.5%" of the EU's GDP or "around 200 billion euro" adopted by heads of state and government.
Under the plan, the so-called de minimis threshold for state aid to small companies will be raised to 500,000 euro for the next two years in an effort to fend off a deepening economic recession, the leaders agreed.
This represents a significant increase from the threshold of 200,000 euro currently applied for most cases, according to UEAPME, the European association of craft and small businesses.
Beyond this limit, EU countries wishing to support companies must ask for permission from the European Commission, which then checks whether the measures are justified and do not unfairly disadvantage competitors.
The move was hailed as a victory by small business organisations, which have been pushing for the de minimis threshold to be raised for years.
UEAPME spokesperson Francesco Longu warned EU countries to use the possibility wisely. "This more generous approach [on state aid] should not be used for companies which were already in trouble before the crisis started," he told EurActiv. Rather, he said support should be made available to companies which had experienced financial problems "as a result of the crisis".
The European Commission, which governs EU state aid rules for SMEs, was requested to make a legislative proposal on the issue, which could come "as early as next week," Longu said.
UEAPME also hailed an agreement to guarantee state backing of up to 100,000 euro for SMEs which are unable to pay back debts to their bank as a result of the crisis. According to Longu, the measure "will have an extraordinary multiplier effect" as it will allow small companies to cover up to 1 million euro of debt.
Nevertheless, there was still disappointment over the rejection of a proposal to apply reduced VAT rates to local services, such as hairdressers and restaurants. The proposal had been backed notably by France, the current holder of the EU presidency, and represents a setback for President Nicolas Sarkozy (see EurActiv France).
For his part, Sarkozy insisted that he would not give up on the proposal. Speaking at a press conference after the summit, he said: "As for VAT, the decision will be taken in March, at the Ecofin Council. It is being discussed with [German Chancellor] Angela Merkel, and we agreed [to postpone the decision to March]."
