International

For many years banks have been reluctant to extend credit to small businesses. In part because of this, new players have recently entered the market, such as, in the Netherlands, credit unions and the newly-established microfinance organisation Qredits. SP Euro-MP Dennis De Jong, commenting on the problem, says that ‘the European Commission still works primarily via traditional banks. For other players all sorts of barriers have been erected. I’ve now asked the Commission to ensure that these new initiatives, which are more in tune with the small business owner, are given a fair chance.’

The European Commission has numerous programmes from which in theory small business should be able to profit. In practice, little comes of these, as De Jong explains. ‘For small loans up to €25,000 there’s the PROGRESS programme via which European loan guarantees are granted. Owners of businesses can via mediation by a group such as Qredits already get loans of this kind. Many small firms however need somewhat bigger loans than that, so I’m now asking the Commission to raise the maximum sum which can be underwritten to €50.000. This will in finally give institutions such as Qredits the necessary elbow room.’

Most funds for small and medium-sized businesses are made available by the Commission via the European Investment Bank (EIB), which then channels the money via banks in the member states. In practice, however, only middle-sized firms ever access these loans. ‘Only those with an official banking licence can channel EIB loans,’ De Jong says. ‘Credit unions have consciously chosen not to apply for a banking licence, as they’re too small-scale. So I’ve also requested the Commission to look into whether an exception can be made for small firms, exempting credit unions from the demand for a banking licence. If that case the possession of a certificate conforming to the European code of conduct for the extension of microcredit in what’s known as the JASMINE framework would be sufficient. Were this to be accepted, it could give an enormous boost to small businesses looking to invest. In these times of rising unemployment that’s just what we so badly need.’