Financing SMEs and Entrepreneurs 2020

32. The Netherlands

Key factson SME financing

The recovery of the Dutch economy continued in 2018, with GDP showing a year-on-year growth rate of 1.8%, and unemployment decreasing a further 1.3 percentage point to 3.6%, close to the lowest percentage since 20091.

New lending to SMEs stood at EUR 18 billion in 2018. This represents a slight decrease compared to 2017, when it stood at EUR 21 billion. Total outstanding business loans also decreased slightly, from EUR 328 billion in 2017 to EUR 325 billion in 20182.

Bank loans continue to be the main source of external financing for SMEs in the Netherlands. However, according to CPB’s3 2019 policy brief, Dutch SMEs had recourse to bank finance less often than their European counterparts did. On the other hand, the percentage of requested loans that were fully authorised rose from 74% in 2015 to 84% in 2018. The interest rate for SME firms (2-250 employees) is higher than for large firms by 2.0 percentage points (respectively 4.1% and 2.1%). The interest rate for large firms decreased by 40 basis points in 20184.

The sum of venture and growth capital investments in the Netherlands has fluctuated over the last decade with peaks in 2008 (EUR 691 million), 2015 (EUR 788 million), 2017 (the highest point so far with EUR 930 million) and 2018 (EUR 868 million). Since 2014, total private equity investments have not dipped below the EUR 700 million mark.5

The average number of days before receiving a B2B payment was 28 days in 2018, with the average contractual term being 27 days, as was the case in 2017. The average number of days of delay to receive a B2B payment therefore remains 5 days, a decrease from 2015 by one day, and a considerable decrease compared to preceding years. The number of bankruptcies continued to decrease in 2018, with a year-on-year decrease of 4.4%. The number of bankruptcies is at a lower level than in 20076.

Several programmes are in place to support SMEs’ access to finance. These include different guarantee schemes, like the Guarantee Scheme for SMEs (BMKB). Another is Qredits, a microcredit institution, introduced SME loans of various sizes in 2013. Furthermore, the Netherlands is creating a National Promotional Institution named Invest-NL. This institution is due to be established by the end of 2019. The aim of Invest-NL is, among other things, to help SMEs through financing or the development of viable business cases.

Table 32.1. Scoreboard for the Netherlands

Indicator	Unit	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Debt
Outstanding business loans, SMEs	EUR billion	..	..	..	..	..	..	143.3	136.0	130.4	124.1	125.9	127.1
Outstanding business loans, total	EUR billion	258.0	304.8	313.5	313.9	342.1	349.1	346.5	330.5	370.2	349.1	328.3	325.3
Share of SME outstanding loans	% of total outstanding business loans	..	..	..	..	..	..	41.4	41.1	35.2	35.6	38.3	39.1
New business lending, total	EUR billion	..	..	..	123.0	124.9	110.0	97.3	83.7	146.7	122.7	129.8	130.6
New business lending, SMEs	EUR billion	..	..	..	10.2	19.5	18.7	18.8	18.0	18.2	16.0	20.9	18.2
Share of new SME lending	% of total new lending	..	..	..	8.3	15.6	17.0	19.3	21.5	12.4	13.0	16.1	13.9
Outstanding short-term loans, SMEs	EUR billion	..	..	..	..	..	..	30.1	26.8	23.1	19.8	17.9	16.6
Outstanding long-term loans, SMEs	EUR billion	..	..	..	..	..	..	113.3	108.2	107.3	104.3	107.9	110.0
Share of short-term SME lending	% of total SME lending	..	..	..	..	..	..	21.0	19.8	17.7	15.9	14.3	13.1
Government loan guarantees, SMEs	EUR million	..	400.0	370.0	945.0	1040.0	590.0	415.0	473.0	523.0	710.0	646.0	643.0
Non-performing loans, SMEs	% of all SME loans	..	..	..	..	..	..	10.0	10.8	9.5	8.1	8.8	9.2
Interest rate, SMEs	%	5.4	5.7	4.5	6.0	6.4	5.1	4.3	4.1	4.4	3.7	2.9	4.1
Interest rate, large firms	%	..	..	..	..	3.5	3.6	3.4	2.8	2.4	3.2	2.5	2.1
Interest rate spread	% points	..	..	..	..	2.9	1.5	0.9	1.3	2.0	0.5	0.4	2.0
Collateral, SMEs	% of SMEs needing collateral to obtain bank lending	..	..	47.0	45.0	44.0	47.0	50.0	43.0	29.0	34.0	40.0	59.0
Percentage of SME loan applications	SME loan applications/ total number of SMEs	..	..	29.0	22.0	18.0	22.0	21.0	21.0	16.0	14.0	18.0	12.8
Rejection rate	1-(SME loans authorised/ requested)	..	..	31.0	10.0	13.0	28.0	28.0	27.0	7.0	18.0	17.0	16.0
Utilisation rate	SME loans used/ authorised	..	..	72.0	75.0	70.0	50.0	54.0	44.0	89.0	73.0	83.0	84.0
Non-bank finance
Venture and growth capital	EUR million	498.0	575.0	506.1	323.3	660.0	419.4	389.3	589.9	714.2	704.3	731.2	868.0
Venture and growth capital (growth rate)	%, Year-on-year growth rate	..	15.5	-12.0	-36.1	104.1	-36.5	-7.2	51.5	21.1	-1.4	3.8	18.7
Leasing and hire purchases7	% of SMEs	..	..	..	..	..	..	..	..	9.0	16.0	12.0	21.0
Factoring and invoice discounting	% of SMEs	..	..	..	..	..	..	..	..	..	..	..	2.0
Other indicators
Payment delays, B2B	Number of days	13.2	13.9	16.0	17.0	18.0	18.0	17.0	16.0	6.0	5.0	5.0	5.0
Bankruptcies, SMEs	Number	3 589	3 842	6 942	6 162	6 117	7 349	8 376	6 645	5 271	4 399	3 291	3 144
Bankruptcies, SMEs (growth rate)	%, Year-on-year growth rate	..	7.0	80.7	-11.2	-0.7	20.1	14.0	-20.7	-20.7	-16.5	-25.2	-4.5

Source: See Table 32.3.

SMEs in the national economy

The recovery of the Dutch economy continued in 2018, with GDP showing a year-on-year growth rate of 1.8%, and unemployment decreasing a further 1.3 percentage point to 3.6%, the lowest percentage since 2009.

SMEs comprised 99.8% of all Dutch enterprises and employed 64.2% of the labour force in 20188.

Table 32.2. Distribution of firms in the Netherlands, 2018

Firm size (full time employees)	Number	%
All firms	1 148 077	100
SMEs (0-250)	1 146 351	99.8
Micro (0-10)	1 095 882	95.5
Small (10-49)	41 626	3.6
Medium (50-250)	8 843	0.8
Large (250+)	1 726	0.2

Note: Number of employees refers to full-time employees. All industries are included, as are non-employer enterprises. These figures are based on forecasts based on 2008-14 figures.

Source: European Commission, 2018.

SME lending

The Dutch Central Bank uses loan size (rather than the size of the borrower) to define SME loans. Furthermore, each bank uses its own reporting system, which makes the aggregation of loan data challenging.

New lending to SMEs in 2018 stood at EUR 18 billion, which represents a slight decrease in comparison to 2017, when the indicator stood at EUR 21 billion. Total outstanding business loans decreased from EUR 328 billion in 2017 to EUR 325 billion in 2018.

Credit conditions

Interest rates for SME firms (2-250 employees) are higher than for large firms by 2.0 percentage points. They stand respectively at 4.1% and 2.1%. Interest rates for large firms decreased by 40 basis points in 2018. Collateral requirements for SMEs have increased since 2015, but figures have fluctuated over the years.

The percentage of SMEs seeking loans has fluctuated over the last couple of years between 18% and 24%. The percentage of requested loans authorised in full have risen by one percentage point in 2018, reaching 84%. This percentage is however considerably lower for micro-firms (61%)9.

Alternative sources of SME financing

There was a substantial increase in equity investments in 2014, indicating rising demand from small and large firms alike for this source of financing. The total sum of venture and growth investments was EUR 700 million, albeit fluctuating between EUR 727 million in 2016, EUR 930 million in 2017 and 868 million in 2018.

Other indicators

The average number of days before receiving a B2B payment was 28 days in 2018, with the average contractual term being 27 days, as was the case in 2017. The average number of days of delay to receive a B2B payment therefore remains at 5 days, a decrease from 2015 by one day, and a considerable decrease compared to preceding years.

The number of bankruptcies continued to decrease in 2018, with a year-on-year decrease of 4.47%. The number of bankruptcies has dipped below its 2007 level. In fact, compared to 2013, the number has more than halved, decreasing from 8 376 to 3 144 in 2018.

Government policy response

After a decline in government loan guarantees in 2010-2013, volumes increased to EUR 710 million in 2016, only to drop to EUR 646 million in 2017 and EUR 643 million in 2018. The 2010-2013 decrease can mainly be attributed to a decrease in demand by SMEs (due to a delay in investments), and stricter credit standards from banks, which led to a reduction in the size of some of the loan facilities (BMKB, GO and Gowth Facility) offered.

The Guarantee Scheme for SMEs (BMKB)10 helps SMEs that have a shortage in collateral to obtain credit from banks. The state guarantees the loan segment for which collateral is lacking and thereby lowers the risk for banks. Banks were more willing to provide a loan if that loan was partially guaranteed. In 2015, the scheme guaranteed a maximum amount of EUR 1.5 million, 67.5% of the loan for start-ups and for small credit requests, 60% of the loan for innovative firms, and 45% of the loan for existing companies.

The Guarantee for Entrepreneurial Finance (GO)11 was launched in March 2009. It provides banks with a 50% guarantee on new bank loans, ranging from EUR 1.5 million to EUR 150 million. GO thus substantially lowers the risk for banks issuing credit to entrepreneurs.

In 2013, the government introduced a fund of funds for later-stage venture capital investments in cooperation with the European Investment Fund (EIF). Together with banks, the government is promoting the diffusion of information to SMEs with regard to these types of instruments. In April 2014, a credit desk was established for entrepreneurs as a central information point for financial questions.

In 2009, a successful microcredit institution, Qredits12, was launched, supported by the government and national banks. In December 2013, Qredits introduced SME loans (EUR 50 000 - EUR 150 000). The maximum loan amount was increased to EUR 250 0000 in November 2014. Since June 2016, Qredits also offers flexible loans up to EUR 25 000 for entrepreneurs who need working capital finance. Qredits also developed a programme that provides coaching and advice to micro-entrepreneurs. The government supported this initiative financially during the 2010-14 period.

In October 2015, the NLII (Dutch Investment Institution) was founded by a group of Dutch institutional investors. However, the NLII was discontinued in 2018 because the NLII could not identify investment opportunities for institutional investors. These investors will continue with the NLII subordinated loan fund of EUR 300 million and the NLII Business loan fund of EUR 960 million.

Currently, several instruments for the financing of innovation are in place. Among them are seed capital13, regional development agencies, a business angel co-investment fund and proof-of-concept funding14. Under the seed capital instrument, funds are issued to investment funds that mainly invest in tech start-ups. The task of the regional development agencies (ROMs) is to boost business development, innovation and investments. They do so by taking shares in innovative companies. Additionally, they attempt to attract foreign companies in order to foster innovation and employment. The business angel co-investment fund selects several business angels to co-invest with. The selected business angels choose the companies to invest in. Several facilities for proof of concept financing and later stage financing are also offered. For example, DVI15 16 i.e. the Dutch Venture Initiative takes minority interests in later stage venture capital firms. With proof-of-concept funding, start-ups and SMEs can use loans from the funding scheme to examine whether their idea is feasible on the market.

Figure 32.1. Trends in SME and entrepreneurship finance in the Netherlands

Source: See Table 32.3.

Statlink

Table 32.3. Sources and definitions for the Netherland’s Scoreboard

Indicator	Definition	Source
Debt
Outstanding business loans, SMEs	Total new loans to small and medium sized enterprises, defined as the total amount of new loans of up to EUR 1 million, including renegotiations. Total new loans to small and medium sized enterprises, defined as the total amount of new loans of up to EUR 1 million, including renegotiations.	Dutch National Bank
Outstanding business loans, total	Total loan amount outstanding for all Dutch firms.	Dutch National Bank
New business lending, total	Total new loans amount outstanding for all Dutch firms.	Dutch National Bank
New business lending, SMEs	New loans amount (up to EUR 1 million) outstanding to Dutch SMEs.	Dutch National Bank
Outstanding short-term loans, SMEs	Lending by the three Dutch major banks to Dutch SMEs, outstanding loans (up to EUR 1 million) with a duration of one year.	Dutch National Bank
Outstanding long-term loans, SMEs	Lending by the three Dutch major banks to Dutch SMEs, outstanding loans (up to EUR 1 million) with a longer than one year.	Dutch national Bank
Government loan guarantees, SMEs	Government guaranteed loans to all SMEs by BMKB and Growth Facility and GO. Before 2014 the share of SMES in guarantee schemes was estimated. For 2014 and later actual figures are used	Netherlands Enterprise Agency (RVO)
Non-performing loans, SMEs	(Gross) Non-performing loans and advances of NFC's divided by (Gross) Total loans and advances of NFCs PM Dutch firms/firms with loans or advances at Dutch banks (both Dutch and foreign firms)	Dutch National Bank
Interest rate, SMEs	Average fixed rates (SMEs defined as firms with less than 250 employees in 2007-2009 and defined as firms with less than 50 employees in 2010 and 2011 and defined as firms with 50-250 employees from 2012 on). From 2018 SMEs defined as firms with 2-250 employees.	Financemonitor (CBS) Dashboard
Interest rate, large firms	average fixed rates	Financemonitor (CBS) Dashboard
Collateral, SMEs	The proportion of SME’s (2-250 employees) which were required to provide collateral on last bank loan. SMEs defined as enterprises with less than 50 employees until 2015.	Financemonitor (CBS) Report
Percentage of SME loan applications	Percentage of SMEs (2-250 employees) that made a finance application (not solely loans) (SMEs defined as firms with less than 250 employees in 2007-2009 and defined as firms with less than 50 employees in 2010 and 2011 and defined as firms with 50-250 employees from 2012-2015).	Financemonitor (CBS) Report
Utilisation rate	Finance applications authorised in full to SMEs (2-250 employees for 2015-2017) (defined as firms with less than 250 employees in 2007-2009 and defined as firms with less than 50 employees in 2010 and 2011 and defined as firms with 50-250 employees from 2012-2014).	Financemonitor (CBS) Report
Non-bank finance
Venture and growth capital	Investments made by Dutch private equity investors in the private sector. All enterprises.	NVP
Leasing and hire purchases	Percentage of SMEs requiring external finance and having applied for it which had recourse to this instrument, as opposed to other types of instruments. Since 2018 the factoring and leasing data are divided because Statistics the Netherlands (CBS) performed the analysis instead of Panteia.	Financemonitor (CBS) Report
Factoring and invoice discounting	Percentage of SMEs requiring external finance and having applied for it which had recourse to this instrument, as opposed to other types of instruments. Since 2018 the factoring and leasing data are divided because Statistics the Netherlands (CBS) performed the analysis instead of Panteia.	Financemonitor (CBS) Report
Other indicators
Payment delays, B2B	Average number of days for business-to-business. All enterprises	Intrum Justitia European Payment Report 2018
Bankruptcies, SMEs	Number of organisations (pronounced bankrupt) and institutions with more than 2 employees	Statistics the Netherlands (CBS)

References

Centraal Bureau voor de Statistiek (Statistics Netherlands) 2019, Number of banktruptcies 2018, available at

https://opendata.cbs.nl/statline/#/CBS/nl/dataset/82242NED/table?ts=1559560484040

Centraal Planbureau 2019, Macro economische verkenning 2019, available at

https://www.cpb.nl/sites/default/files/omnidownload/Macro-Economische-Verkenning-MEV-2019.pdf

De Nederlandsche Bank (Dutch Central Bank) 2019, Loans to SMEs 2018, available at

https://statistiek.dnb.nl/en/downloads/index.aspx#/

European Commission 2019, SBA Factsheet 2018, available at

https://ec.europa.eu/docsroom/documents/32581/attachments/21/translations/en/renditions/native

NVP (Dutch private equity and venture capital association) 2019, Annual results, and trend reports 2018 available at

https://www.investeurope.eu/media/811517/invest-europe-2018-european-private-equity-activity.pdf

Centraal Bureau voor de Statistiek (Statistics Netherlands) 2019, Financemonitor 2018 available at

https://www.cbs.nl/nl-nl/maatwerk/2019/05/financieringsmonitor-2018

Centraal Planbureau (Netherlands Bureau for Economic Policy Analysis), 2019, Dutch SME bank financing, from a European perspective 2019 available at

https://www.cpb.nl/sites/default/files/omnidownload/Policy%20Brief%20SME%2009072019_0.pdf

Notes

← 1.  Macro Economische Verkenningen (MEV) 2019, page 25, Centraal Economisch Plan en CPB 2019 https://www.cpb.nl/sites/default/files/omnidownload/Kerngegevenstabel%202017-2020%2C%20plus%20koopkracht_0.pdf

https://opendata.cbs.nl/statline/#/CBS/nl/dataset/80590ned/table?ts=1533886271304 (Unemployment as percentage of the Dutch labour force, ‘national definition’). This percentage is from December 2018.

← 2.  See Netherlands Mastercoreboard 2018, from dnb data tables: t5.14 and t5.2.7.4

← 3.  CPB Policy brief on Dutch SME bank financing, from a European perspective 2019. This policy brief confirms that Dutch SMEs are applying for relatively few bank loans, and that those applications are relatively often rejected by the banks. This applies to all businesses but more so to SMEs. The 2009–2018 period shows a steady trend, although in recent years the difference with the eurozone average number of applications has grown, while for the number of rejections the difference has decreased.

https://www.cpb.nl/sites/default/files/omnidownload/Policy%20Brief%20SME%2009072019_0.pdf

← 4.  See Netherlands Mastercoreboard 2018, from Financemonitor (CBS) 2018 and https://dashboards.cbs.nl/v1/financieringsmonitor2018_180023/

← 5.  The method of calculating the sum of venture and growth capital investments has changed compared to last year. Therefore, earlier figures have been updated.

← 6.  See Netherlands Mastercoreboard 2018, from Intrum Justitia Report 2018, page 4 and Financemonitor (CBS) 2018.

← 7.  There is a break in the time series. See definitions of asset-based indicators below.

← 8.  See Netherlands-2018 SBA Factsheet EU Commission Report page 2. The labour force in 2018 for SME’s is 3 679 923.

← 9.  See Financemonitor 2018 (CBS), page 4.

← 10.  See: https://www.rvo.nl/subsidies-regelingen/borgstelling-mkb-kredieten-bmkb

← 11.  See: https://www.rvo.nl/subsidies-regelingen/garantie-ondernemingsfinanciering-go

← 12.  See: https://qredits.nl/over-qredits/wie-is-qredits/

← 13.  See: https://www.rvo.nl/subsidies-regelingen/seed-capital

← 14.  See: https://www.rvo.nl/subsidies-regelingen/vroegefasefinanciering-vff

← 15.  See: https://www.eif.org/what_we_do/resources/dvi/

← 16.  See: https://www.eif.org/what_we_do/resources/dvi-II/index.htm