New OECD report shows SME lending hit new highs during pandemic as small businesses face new pressures during recovery
29/03/2022 – A new report from the OECD, “Financing SMEs and Entrepreneurs 2022: An OECD Scoreboardshows that outstanding SME loans increased significantly in the first year of the pandemic. The median stock of SME loans increased by 4.9%, the largest increase since the OECD Scoreboard was created 10 years ago1. This was supported by a surge in loan guarantees provided by the government (up 110% YoY in 2020), debt standstills, as well as direct lending to SMEs (up 17% YoY annual in 2020).
Emergency support measures – including central bank monetary policy interventions – have also driven interest rates to record lows, with the median SME interest rate in scoreboard countries falling by 0. .4 percentage points in 2020, the largest drop since 2009.
In most scoreboard economies, unprecedented support measures averted a wave of bankruptcies: in median terms, bankruptcies fell by 11.7% in scoreboard countries in 2020. As countries phase out support measures – and businesses see increased pressure from energy costs – bankruptcies and insolvencies are expected to rise in the future.
The report says it is essential that government recovery plans continue to provide targeted support to viable SMEs and entrepreneurs in need. The war in Ukraine and the resulting humanitarian and economic crisis reinforce the importance of support and access to finance for SMEs and entrepreneurs.
SMEs make a major contribution to the labor market and have the potential to play a key role in driving the green transition and ensuring energy security. The report indicates that they need access to a wider range of financial tools and instruments to build their resilience.
Speaking at the launch of the report, OECD Secretary-General Mathias Cormann said:Support measures and favorable lending conditions have left many SMEs with higher debt levels that will need to be tackled in the future. In particular, SMEs need better access to alternative financing instruments to reduce their reliance on debt and provide greater flexibility and resilience in these unstable economic times.”
SMEs account for the majority of employment and production in OECD economies. They will need to thrive if we are to succeed in delivering a strong, sustainable and resilient recovery. However, SMEs received relatively less attention in national recovery plans than during the crisis. According to OECD analysis, support to SMEs through loans, grants and deferral instruments amounted to $32 billion (or 4.5% of total support) in recovery, compared to more than $3.136 billion (40% of total support) in previous measures taken to support SMEs in the face of the immediate effects of the pandemic.
Learn more about the OECD’s work on “Finance for SMEs and Entrepreneurs 2022: An OECD Scoreboard”.
Further information on the OECD’s work on SMEs is available here www.oecd.org/cfe/smes/.
Working with more than 100 countries, the OECD is a global policy forum that promotes policies to preserve individual freedom and improve the economic and social well-being of people around the world.
1 Countries reporting data for the dashboard are Australia, Austria, Belarus, Belgium, Brazil, Canada, Chile, People’s Republic of China, Colombia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Greece, Hungary, Indonesia and Ireland. , Israel, Italy, Japan, Kazakhstan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Peru, Poland, Portugal, Russian Federation, Serbia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, Ukraine, United Kingdom and United States.
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