The European Small Business Finance Outlook 2023 study, published at the end of 2023, shows that Romania ranks first in the European Union in terms of both the growth of outstanding guarantees and the activity of granting new guarantees.

The study is conducted by a team of experts from the European Investment Fund and provides an overview of the main financial markets, financed sectors, and various financing solutions accessed by SMEs in the EU.

The top three countries that experienced an increase in the volume of outstanding guarantees in 2022 compared to 2021 are Romania (+57.5%), Poland (+23%), and the Czech Republic (+17.1%). Regarding the growth in the activity of granting new guarantees, Romania with a 53% increase is again at the top in Europe, followed by Spain (+16%) and Poland (+10.4%).

Relative to GDP, Hungary, Poland, and Romania are the top three countries that recorded the highest volume of new guarantees in 2022 (2.7%, 1.9%, and 1.3%, respectively).

According to the same study, during the first half of 2023, 24% of SMEs in the euro area faced severe problems accessing financing, with general economic prospects and lack of public support for financing listed as the most important factors hindering access to financing.

Other mentioned factors include the sharp increase in credit costs over the past year, with the cost of borrowing reaching 4.99% in August 2023, a level unseen since 2008. The increase in borrowing costs has affected lending activity, which has declined significantly in 2022 and 2023, with banks considerably tightening lending standards for SMEs.

The volume of newly granted guarantees, at the European level, nearly halved, decreasing by 45.9% in 2022 compared to the previous year. However, with a volume of 49.2 billion euros, the volume of guarantees remains well above the pre-pandemic level of 38.8 billion euros in 2019.

The most significant absolute increases were observed for the volumes of guarantees granted by FNGCIMM/Romania with an increase of 2.3 billion euros, followed by BGK - the Development Bank of Poland with an increase of 2.1 billion euros, and TESKOMB from Turkey, with an increase of 1.4 billion euros.

In this context, the study highlights the countercyclical role of guarantee institutions, which implemented support measures during the Covid-19 crisis, with the volume of guarantees reaching a historic high of approximately 331 billion in 2020, decreasing by 14.5% in 2022, reaching a level of 266.6 billion euros.

This decline mainly reflects the gradual elimination of programs implemented under the Temporary Crisis Framework-Covid 19.

Thus, from the published study, it appears that the volume of newly granted guarantees is much lower in 2022 than in the pandemic years 2020 and 2021, but still significantly above the pre-pandemic level.

"During the period 2020 - 2023, since taking over as CEO, FNGCIMM's portfolio has included 9 government programs, and the activity has maintained the same intensive pace over the 4 years. The number of guarantees granted by the FNGCIMM team in the four reference years exceeded 143,677 guarantees, amounting to 72,403 million lei. The state aid schemes attached to the IMM INVEST and IMM INVEST PLUS programs represented a European record, supporting the granting of 84,547 guarantees, amounting to 54.3 billion lei, which attracted funding of over 63.8 billion lei. The value of guarantees granted during the period 2020 - 2023 exceeded the value of all guarantees granted by FNGCIMM in the 18 years of activity carried out in the period 2002 - 2019, representing 111.30% of the total of the previous years.", said the CEO of FNGCIMM, Mr. Dumitru Nancu.

The study appreciates the position of FNGCIMM, which, like BPI France and BBB/UK, owes its large volume of guarantees to the implementation of an extensive government guarantee program.

The study also notes the downward trend in guarantee activity at the European level, but precisely in this context, Romania's contribution (+58%) to the volume of outstanding guarantees granted at the European level in 2022 compared to 2021 is highlighted, followed by Poland (+23%) and the Czech Republic (+17.1%). In contrast, the largest decrease was observed in Bulgaria (–36%), Italy (–34%), and the United Kingdom (–33%).

In all countries, the average annual growth rate was –1%, significantly higher than the overall percentage decrease of –14% recorded, reflecting that this decline was substantially determined by the gradual elimination of significant parts of the volume of the major AECM members.

(Photo: Freepik)