This article is part of our special report SME’s Access to Finance.
Special commercial embassies in Brazil and other fast-growing economies, easier terms for banking credit, and new investment funds designed to assist innovative businesses are likely to be touted in a European Commission action plan due later this year.
Drafts of the plan for SMEs' access to finance will be circulated next month with a view to final publication in December, EURACTIV has learned.
The plan is a joint initiative of Michel Barnier and Antonio Tajani, commissioners for the internal market and enterprise respectively.
The main thrust of the action plan will involve the introduction of a long-touted initiative to facilitate venture capital for SMEs across Europe.
Cross-border venture capital is a Single Market Act priority
This is a priority since it is one of the key actions of the Commission's Single Market Act, but the exact form such a new fund will take will be hotly debated.
It is likely to leverage existing EU funds through the European Investment Fund, but is also likely to propose the introduction of a new model of smaller funds.
The idea is to mimic US-style funds which are capable of taking a longer-term, more strategic view of company potential, such as US university endowment schemes.
Controversial elements remain on the tax status of the fund's investments and the extent to which private venture capital could be involved in their establishment.
Gerhard Huemer, the director for economic and fiscal policy at the European Association of Craft, Small and Medium-sized Enterprises (UEAPME), said: "If you are a private investor in Germany investing into a French fund which invests in an SME whose dividends are paid in the UK, for example, the issue of where the tax on the dividends is paid will be tricky."
Ross Butler, the head of communications with the European Venture Capital Association (EVCA) told EURACTIV that the idea will probably take the form of "multiple funds of funds, possibly put out to tender to private managers that would select venture capital funds for investment".
The action paper will also suggest ways that banks can lend money to SMEs without applying the usual stringent criteria of balance-sheet valuation, one of the main reasons why banks frequently refuse SMEs' loan requests.
An EU official close to the negotiations surrounding the action plan told EURACTIV: "The qualitative rating of banks on the basis of balance sheets is a crude mechanism for assessing creditworthiness." He said the action plan would propose different criteria for a more "three-dimensional" assessment of SMEs' bankability.
"What we need is for innovation to be assessed, for example, by examining how many patents the company might have pending but not yet registered," the official said.
SMEs need a place in the sun
The action plan will also push a number of non-financial behavioural ideas, designed to change the way that institutions operate to make them favour the interests of SMEs.
Danish MEP Bendt Bendtsen, who chairs the SME circle at the centre-right European People's Party (EPP), is pushing for a network of simple temporary offices for SMEs located in growing markets such as Brazil and administered by the European External Action Service.
He said making simple offices available to European SMEs for short periods of time would help them to assess cheaply and effectively whether they had a chance of success in those markets.
"We need to help the SMEs into the export markets because growth rates in the BRIC countries remain high," he said.