Good practice:

Programme of Financial Engineering Instruments for SMEs

SMEs in Slovenia have faced difficulties in obtaining financing for development investment, both in their early stages as well as in their development and growth stages. Structural problems have been reflected in the slow growth of SMEs and the low percentage of innovative and high-tech enterprises. The financial instrument was set up to fill a market gap in SME access to finance and to promote entrepreneurship. It provided venture capital funds, guarantees and microloans through the Slovene Enterprise Fund (SEF), acting as a holding fund manager, which also combined PFEI assistance with other private and nationally-funded financial instruments targeted at the same final recipients. The SEF offered financial products tailored to the different needs of SMEs. It supported enterprises at the start with seed capital, in their growth phasewith venture capital and more mature companies with guarantees and loans.
The PFEI financed equity (seed capital, direct capital investment, venture capital), microloans and guarantees with subsidies of interest rate. The different products addressed all SMEs, within the limits of State aid provisions, irrespective of their activity. They supported start-ups,development and global growth, business model renewal and innovation. Some products paid special attention to specific sectors or policy aspects such as female entrepreneurship, creative industries, or socially beneficial productsand services.

A total amount of EUR 387 million was available for financing at lower than market rates, as well as for coaching and technical support.

2.294 SMEs were supported with EUR 387 million of financial support that unlocked EUR 708 million in total SME investment. 7 300 new jobs were created and another 88.000 maintained.

We have to tailor the financial incentives to the needs of SMEs and offer them as guarantees with interest rate subsidies, direct credits for special purposes, equity financing such as venture capital, seed capital and mezzanine capital, as well as special incentives for specific target groups.

We found these financial incentives can be replicated, further explored, elaborated and used to finance activities such as starting an enterprise, development and innovation in an enterprise, fast global growth, female entrepreneurship, creative industries, business model renewal andsocially beneficial products and services. Such incentives can significantly improve the cooperation between public authorities, financial intermediaries and other public and private bodies and ensure financial products that are suitable to the needs of final recipients, contributing to the success of financial or economic initiatives. Main lesson learnt was that by adopting swift, simple, transparent and efficient procedures minimize the time and effort required to invest.