Financing SMEs and Entrepreneurs 2024

42. Switzerland

Key facts on SME financing

Only 0.3% of all Swiss enterprises are large, and SMEs continue to dominate the enterprise landscape, constituting 99.7% of all firms.

Switzerland exhibited a real GDP growth of 2.6% in 2022, compared with 5.4% the previous year (2021).

Total outstanding SME loans rose by 5.0% in 2022, reaching CHF 534 billion, an even higher growth rate compared to the 2021 figure of 4.4%. The most significant growth was recorded among micro enterprises with an increase of 6.4%. While small and medium-sized enterprises recorded a growth rate of 1.9% respectively 2.8%.

Over the 2007-2022 period, SME loans expanded by 65.4%, while overall corporate lending rose by 73.4%.

Lending standards remained broadly unchanged in 2022, with robust loan demand by firms throughout 2022, while demand for loans by households slowed slightly in the second half of 2022.

The average interest rate charged to SMEs increased since its low point of 1.74% in 2021 reaching 2.56% in 2022, while the interest rate spread between large and small companies decreased to its minimum since 2007 to 46 basis points.

In 2022, venture and growth capital investments experienced a 79.5% increase, driven mainly by a rise in growth capital, after the registered rise by 14.4% in 2021. These increases follow the sharp decrease of 89.3% in 2020 due to the COVID-19 pandemic.

Turning to the developments in online alternative finance, the volume of crowdfunding declined for the first time in 14-years as well as the number of active platforms, which fell from 37 to 35. The largest volume share within the various crowdfunding categories continues to come from crowdlending followed by crowdinvesting. The volume of crowd supporting/crowd donating has decreased compared to 2021.

Payment delays in the business-to-business sector remained substantially stable compared with 2021 dropping from 13 to 12 days in 2022. They are still higher than before the COVID-19 pandemic (8 days in 2019). The liquidity problems caused by the pandemic are still an effect.

In Switzerland, there are four guarantee cooperatives that help promising SMEs obtain bank loans of up to CHF 500 000. Loan guarantee volumes increased steadily over the 2007-2010 period, declined slightly in 2011, and continued to grow from 2012 to 2018. The Parliament amended the Federal Law on Financial Aid for Loan Guarantee Organisations: since 1 July 2019, the law allows for guarantees up to CHF 1 million (previously, the ceiling was CHF 500’000).

The Swiss Federal Council has adopted three measures in particular to support SME financing during and beyond the pandemic: bridging credits through a guarantee programme, credits through a guarantee programme specific for start-ups and a hardship support programme (mainly non-repayable contributions) for companies which were, due to the nature of their economic activities, particularly affected by the consequences of the COVID-19 crisis. These special COVID guaranteed credit programmes require full repayment of the credit in principle within eight years. At the end of 2023, approximately 13% of Swiss companies still benefit from these credits.

Table 42.1. Scoreboard for Switzerland

Indicator	Unit	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
		Debt
Outstanding business loans, SMEs	CHF million	323 093	344 840	343 866	363 566	377 630	384 438	404 793	402 346	403 681	412 005	422 065	441 332	462 978	487 554	508 923	534 554
Outstanding business loans, total	CHF million	401 647	426 489	433 485	458 689	480 922	489 116	513 631	526 532	525 042	538 709	550 365	583 934	606 497	648 133	674 025	696 532
Share of SME outstanding loans	% of total outstanding business loans	80.44	80.86	79.33	79.26	78.52	78.60	78.81	76.41	76.89	76.48	76.69	75.58	76.33	75.22	75.51	76.74
Government loan guarantees, SMEs	CHF million	104	148	187	215	210	219	227	238	244	254	255	263	285	315	322	315
Interest rate, SMEs	%	..	..	2.21	2.11	2.08	2.01	1.99	2.05	2.07	2.04	2.09	1.96	1.83	1.76	1.74	2.56
Interest rate, large firms	%	..	..	1.35	1.23	1.16	1.11	1.16	1.16	1.30	1.25	1.30	1.33	1.30	1.29	1.15	2.10
Interest rate spread	% points	..	..	0.86	0.88	0.92	0.90	0.83	0.89	0.78	0.79	0.79	0.63	0.53	0.47	0.59	0.46
Collateral, SMEs	% of SMEs needing collateral to obtain bank lending	..	..	76.00	75.01	76.56	76.75	74.86	78.78	79.64	79.88	81.86	81.70	82.92	83.93	84.19	84.56
Utilisation rate	SME loans used/ authorised	71.00	70.00	71.00	70.00	69.00	71.00	72.00	72.00	71.76	71.68	70.59	70.30	70.13	71.54	71.38	71.76
		Non-bank finance
Venture and growth capital	EUR million	319.8	300.9	308.5	330.1	227.6	245.8	216.8	237.2	394.3	452.4	1195.9	772.9	1 670	901.7	1032	1903.6
Venture and growth capital (growth rate)	%, Year-on-year growth rate	..	-5.91	2.53	7.00	-31.05	8.00	-11.80	9.41	66.23	14.73	164.35	-35.37	116.07	-46.01	14.45	79.48
		Other indicators
Payment delays, B2B	Number of days	12	13	13	11	10	9	9	7	7	7	7	6	8	13	13	12
Bankruptcies, SMEs	Number	4 314	4 221	5 215	6 255	6 661	6 841	6 495	5 867	6 098	6 684	6 710	6 241	6 004	4897	5127	6799
Bankruptcies, SMEs (growth rate)	%, Year-on-year growth rate	..	-2.16	23.55	19.94	6.49	2.70	-5.06	-9.67	3.94	9.61	0.39	-6.99	-3.8	-18.44	4.78	32.61

Source: See Table 42.3

Macroeconomic and financing conditions

According to the first national accounts data of the Federal Statistical Office, the real GDP grew by 2.6% in 2022 after the 5.4% increase registered in 2021. According to the first available data, the Swiss economy should have grown by 1.3% again in 2023.

While economic performance in 2022 was boosted by the recovery from the pandemic, at the same time, it was held back by the tense energy situation in Europe and downward growth projections at the global level.

Nonetheless, the recovery was particularly evident in services and private consumer spending, which grew significantly in real terms despite higher inflation rates. Exports of services also registered strong growth. However, growth in goods exports was modest. Manufacturing posted above-average growth in 2022 on the back of strong momentum at the beginning of the year.

Household consumption exceeded 2019 levels and is set to rise sharply (+4.2%) in 2022. The manufacturing industry recorded sustained growth (+6.8%), thanks in particular to strong increases in value added in the chemical and pharmaceutical sectors.

SMEs in the national economy

SMEs, defined as firms with up to 250 employees, constituted 99.7% of Swiss enterprises in 2021, employing 66.9% of the labour force. Micro enterprises constituted 89.8% of all firms, employing 25.5% of the country’s workforce, while large enterprises only comprised 0.3% of total firms and employed 33.1% of the labour force.

Table 44.2 Distribution of firms in Switzerland, 2021

By firm size

Firm size	Number	%
All firms	609 518	100
SMEs (1-249)	607 820	99.72
Micro (1-9)	547 074	89.76
Small (10-19)	51 412	8.44
Medium (50-249)	9 334	1.53
Large (250+)	1 698	0.28

Note: Data includes commercial companies in the primary, secondary and tertiary sectors.

Source: STATENT 2021, published in 2022.

SME lending

Lending Market

Both total outstanding business loans and SME outstanding business loans accelerated their increase in 2022 on a year-to-year basis, reaching 3.3% and 5.0% respectively, compared to their 4.0% and 4.4% growth of 2021. The most significant growth was recorded among micro enterprises with an increase of 6.4%. While small and medium-sized enterprises recorded a growth rate of 1.9% and 2.8% respectively. On the other hand, the volume of business loans of large enterprises remained stable. The increase in the total outstanding loans is probably due to the fact that most COVID-19 related support has been phased out and this led to an increase in demand for ordinary credits on the market.

With the exception of 2014, SME loans grew each year between 2007 and 2022, achieving a total growth rate of 65.5%. SME loans generally expanded less rapidly than overall business loan growth, which grew by 73.4% during the same period. Consequently, the share of SME loans in total business loans contracted from 80.4% in 2007 to 76.7% in 2022.

Credit conditions

The survey on bank lending of the Swiss National Bank indicates robust loan demand by firms throughout 2022, while demand for loans by households slowed slightly in the second half of 2022.

The survey also shows lending standards broadly unchanged in 2022, although banks have slightly tightened credit conditions for households toward the end of 2022.

After decreasing continuously since 2017, interest rates for loans under CHF 1 million have risen to 2.56% in 2022 from 1.74% in 2021. The interest rate for large firms has raised to 2.10% in 2022 from 1.15% in 2021.

The interest rate spread for loans to SMEs and loans to large firms, proxied by loans of less than CHF 1 million (SMEs loans) and greater than or equal to CHF 1 million (large firms loans), increased between 2009 and 2011 to 92 basis points (bp), before declining to 83 bp in 2013. Over 2013-14, the interest rate spread increased again to 89 bp but has since then decreased almost every year, reaching 46 bp in 2022, the lowest spread registered over the reference period 2007-2022.

The Banking Statistics of the Swiss National Bank indicate that in 2022, the utilisation rate of credit lines was 71.8%. The percentage of SME loans requiring collateral rapidly increased in the last 7 years. Rising from 74.9% in 2013 and steadily increasing year on year to reach 84.6% in 2022., when in 2021 was 84.2%

Alternative sources of SME financing

Venture capital

The Swiss venture and growth capital investment market is quite volatile and experienced strong growth in the last years. After a moderate increase in 2016 (+14.7%), venture and growth capital investments strongly increased again in 2017 by 164.4%. In 2018, the volume decreased by 35.5% and strongly increased again by 116% in 2019. In 2020 because of the COVID-19 pandemic a contraction of 46% was registered, decreasing to EUR 901.7 million. After the moderate increase in 2021 (+14.4%) followed by substantial growth of 79.5% in 2022 the volume of venture and growth capital invested in Swiss firms reached EUR 1903.5 million, the highest annual amount in the reference period.

While venture capital increased by 28%, it is above all the explosion of growth capital with a growth rate of 270% that has a major influence on this increase. This is mainly due to a single large financing round in the cleantech sector that led to a EUR 600 million funding. This represents 31.6% of the volume of venture and growth capital invested in Swiss firms in 2022.

Later stage venture investments in 2022 remained stable compared to 2021, following the marked 301.3% increase of the previous year. The total volume of later stage venture capital rose by 184% over 2007-2022. On the other hand, seed investment capital experienced a 39.7% decrease in 2022 after the 46.6% drop in 2021.

Start-up investments are becoming increasingly important in the Swiss venture investment market. In 2007, investments in start-ups accounted for 43.7% of venture investments. In 2022, its share increased to 65.5%. Start-up investments have risen 165.7% throughout the reference year and almost quintupled (4.7 times) over 2007-2022.

The Swiss crowdfunding market

The Swiss crowdfunding market is growing rapidly since the launch in 2008 of Cashare, Switzerland's first crowdfunding platform. As of the end of April 2023, there were 35 platforms operating in Switzerland.

In 2022, 4 661 campaigns raised CHF 662.2 million through crowdfunding in Switzerland. The number of campaigns fell by 6.2% compared to 2021. The volume declined for the first time in the 14-year history of crowdfunding in Switzerland. Since the first crowdfunding platform's launch in 2008, crowdfunding in Switzerland has been used to raise CHF 3.7 billion in funds.

The largest volume share within the various crowdfunding categories continues to come from crowdlending with a volume of CHF 497.5 million (-18% compared to 2021). The second highest volume comes from crowdinvesting with a volume of CHF 135.4 million (-8.0%). The volume of crowdsupporting/crowddonating has decreased compared to 2021 and amounted to CHF 29.3 million in 2022 (-22.0%).

Other indicators

According to the annual report of Intrum Justitia, business-to-business payment delays have steadily decreased over the decade 2008-2018, passing from 12 days to 6 days. In 2019 the first increase was recorded, with payment delay period raising to 8 days and by the end of 2021, by 13 days which is the highest this indicator has been since 2007. This suggests that SME liquidity problems increased due to the COVID-19 pandemic in both Switzerland and in most European countries.

Bankruptcies increased by 32.6% in 2022. The 2022 increase could be partially explained by the fact that the measures taken in 2020 to counter the economic effects of the pandemic did not prevent the mid-term bankruptcy of some of the more vulnerable companies.

Government policy response

The federal government assists efficient and viable SMEs in obtaining bank loans by funding loan guarantee cooperatives. These loan guarantee cooperatives enhance SMEs' access to bank loans. The maximum lifetime of a guarantee is 10 years and the maximum guarantee amount per firm is CHF 500 000 (CHF 1 million starting from 1^st of July 2019). Interest rates are set by the banks’ lending funds and depend on the riskiness of the project. In addition to the interest rate, firms typically have to pay a 1.25% commission fee to the guarantee cooperative.

Financing is provided mainly for working capital, expansion, investments or starting a business. In the event of a default, the government refunds 65% of the deficiency to the guarantee cooperatives. By the end of 2022, the number of beneficiaries amounted to 1 789 firms for a total guarantee of CHF 315 million. The scheme costs around CHF 322 million in outstanding liabilities for the government and generated CHF 3 million in realised losses from defaults in 2022 as well as CHF 1.5 re-additions from previous losses, which corresponds to a 0.8% net loss ratio. The government also contributes with an additional CHF 3 million annually to mitigate the administrative costs of the guarantee cooperatives.

In Switzerland, four guarantee cooperatives help promising SMEs obtain bank loans. Three are regional and one is national and provides its services exclusively to women. Loan guarantees increased steadily over 2007-10, declined slightly in 2011, grew until 2016, remained stable in 2017 and grew again in the period 2018-2020. Over the reference period (2007-2022), loan guarantee volumes increased by a factor of 3, largely due to a restructuring of the guarantee programmes, which increased the amount of risk covered by the government from 50% to 65%, in turn increasing demand for guarantees.

On 22nd of May 2019, the Federal Council brought into force the amendment of the Federal Law on Financial Aid for guarantee organisations allowing guarantees up to CHF 1 million from the 1 July 2019. The effects of this change are straight visible in the increase in the volume of the Government loan guarantees, which rose from CHF 285 million at the end of 2019 to CHF 315 million at the end of 2020, an increase of 10.5%. In 2021 the volume reached CHF 322 million and then slightly decreased in 2022 to CHF 315 million.

Specific measures taken to facilitate SME financing during the pandemic crisis

The main support measure of the Federal Government to ensure the liquidity of companies due to the COVID-19 crisis were the bridging credits. Especially small and medium enterprises affected by the COVID-19 crisis have been able to apply for a bridging credit of up to 10% of their annual turnover and no more than CHF 20 million (EUR 19.4 million) at their bank between 26 March and 31 July 2020. The basic credits of up to CHF 500 000 (EUR 485 000) were granted within a quick and very simple procedure. These credits are fully guaranteed by the federal government and have an interest rate of 0%. Credits that exceed CHF 500 000 are guaranteed 85% by the federal government and 15% by the respective bank and have an interest rate of 0.5%. Overall, approximately 138 000 such credits had been granted with a total volume of about CHF 17 billion (EUR 16.5 billion). Therefore, around 23% of all Swiss companies and indirectly around one third of the labor force benefited from this program.

Another related support measure due to the COVID-19 crisis were credits for start-ups, which were guaranteed 65% by the federal government and 35% by the regional government. During the application period between 7 May and 31 August 2020, 359 such credits were granted with a total volume of about CHF 99 million (EUR 96 million).

Furthermore, in November 2020, the so-called hardship support program was installed to support companies which were, due to the nature of their economic activities, particularly affected by the consequences of the COVID-19 crisis. The regional authorities are responsible for designing and implementing their hardship support programs. Therefore companies, which meet the criteria to be considered a hardship case, can, apply for loans, guarantees, sureties or non-repayable contributions. The respective local authority could accept such applications until 31 March 2022. Up to the end of June 2023, non-repayable contributions of around CHF 5.1 billion (EUR 5.2 billion) had been disbursed to about 35 200 companies and guarantees, sureties or loans of around CHF 220 million (EUR 226 million) had been granted to about 2 100 companies. Costs and losses of these regional support programs are mainly covered by the Swiss Confederation.

Fintech regulations and Blockchain / DLT

In terms of regulations, Switzerland does not have specific crowdfunding legislation and crowdfunding is generally governed by the main banking regulations. Despite that Switzerland has already done a lot to remove unjustified barriers to market entry and thus promote the fintech and blockchain ecosystem. The Federal Council, recognizing the importance of financial technology, revised the Banking Ordinance in 2017 and introduced a new authorization category in 2019 to simplify requirements for companies accepting public funds. Companies that operate outside the core business of banks have since been able to accept deposits from the general public of up to a maximum of CHF 100 million on a professional basis subject to simplified requirements.

Additionally, The Federal Council sees sustainable finance as a great opportunity for the Swiss financial centre. The combination of sustainable financial services and digital technology (green fintech) is particularly promising. Switzerland has established in November 2020 a Green Fintech Network and is actively exploring opportunities in green fintech, proposing for example regulatory simplifications for insurtech.

Switzerland is one of the leading locations in the area of distributed ledger technology (DLT) and blockchain. On 1 August 2021, the Federal Act on the Adaptation of Federal Law to Developments in Distributed Electronic Register Technology and the associated blanket ordinance came into force.

Figure 42.1. Trends in SME and entrepreneurship finance in Switzerland

Source: See Table 42.2

Statlink

Table 42.2. Sources and definitions of Switzerland Scoreboard

Indicator	Definition	Source
Debt
Outstanding business loans, SMEs	Credit lines of all SMEs (firms with less than 250 employees, stocks).	Swiss National Bank database; table selection: Banks, Credit volume, Corporate loans, broken down by company size. Total credit lines excl. total credit lines to companies with 250 or more employees [www.snb.ch]
Outstanding business loans, total	Credit lines of all enterprises (stocks). 2007 and 2008 figures include loans to public law institutions.	Swiss National Bank database; table selection: Corporate loans, broken down by company size
Government loan guarantees, SMEs	Four guarantee cooperatives offer loan guarantees for SME of up to CHF 500 000. The federal government covers 65 % of their exposure and shares in the administration costs.	Administrative data from the guarantee cooperatives
Interest rate, SMEs	Interest rate for new loans at the end of the year for investment loans with fixed interest rates, amounts less than CHF 1 million.	Swiss National Bank database; table selection: Interest rates on new loan agreements, by product and loan amount, mean value in December
Interest rate, large firms	Interest rate for new loans at the end of the year for investment loans with fixed interest rates, amounts more than CHF 1 million.	Swiss National Bank database; table selection: Interest rates on new loan agreements, by product and loan amount, mean value in December
Interest rate spread	Spread between the interest rate at the end of the year for investment loans amounts less than CHF 1 million and equal to greater than CHF 1 million.	Swiss National Bank database: Interest rates of investment loans between CHF 50 000 and 1 million (average) minus interest rates of investment loans between CHF 1 and 15 million (average) in December
Collateral, SMEs	Secured utilisation opposite SME customers in relation to total utilisation opposite SME customers.	Swiss National Bank database; table selection: Banks, Corporate loans, broken down by company size; secured utilisation opposite customers (mortgages and secured loans) in relation to total utilisation of demands opposite customers for SMEs (up to 249 employees, public sector entities included),
Utilisation rate	SME loans used in relation to SME loans authorised	Swiss National Bank database; table selection: Banks, Credit volume, Corporate loans, broken down by company size. Total credit lines and utilisation excl. total credit lines to companies with 250 or more employees [www.snb.ch]
Non-bank finance
Venture and growth capital	Seed, Start-up, late and growth stage capital invested.	Invest Europe (former EVCA Yearbook), European Private Equity Activity Data 2022, Investment- Market statistics by country
Other indicators
Payment delays, B2B	B2B Payment delays	Intrum, European Payment Index, European Payment Report Schweiz 2022
Bankruptcies, SMEs	Number of bankruptcies	Creditreform, Presseletter 5. January 2023: Corporate Insolvencies in Europe 2022

References

Creditreform, Presseletter 5.01.2023, “Firmenkonkurse auf Rekordhoch”, available at: Presse https://www.creditreform.ch/news/news/news-details/show/presseletter-01-firmenkonkurse-auf-rekordhochletter 01 - Firmenkonkurse auf Rekordhoch | News | Creditreform

Intrum, “European Payment Report 2022”, available at: https://www.intrum.com/publications/european-payment-report/european-payment-report-2022/

Institute of Financial Services Zug (IFZ), "Crowdfunding Monitor Switzerland 2023", available at: https://blog.hslu.ch/retailbanking/crowdfunding/

Invest Europe, “European Private Equity Activity Data 2022”, available at: https://www.investeurope.eu/media/6719/investing-in-europe-pe-activity-2022-report.pdf

OECD (2017), “Entrepreneurship at a Glance 2017”, available at:

https://www.oecd-ilibrary.org/industry-and-services/entrepreneurship-at-a-glance_22266941

State Secretariat for Economic Affairs SECO, “Studie zur Finanzierung der KMU in der Schweiz 2016”. Bern June 2017, available at: https://www.newsd.admin.ch/newsd/message/attachments/48939.pdf

State Secretariat for International Finance SIF, “Initiation of consultation on amending Banking Ordinance (fintech authorisation)”. Bern June 2018, available at: https://www.sif.admin.ch/sif/en/home/dokumentation/medienmitteilungen/medienmitteilungen.msg-id-71239.html

State Secretariat for International Finance SIF, “Digitalisation of the financial sector”. Berne 2021, available at: https://www.sif.admin.ch/sif/en/home/finanzmarktpolitik/digit_finanzsektor.html

Swiss Federal Council, “Federal Council wants to reduce barriers to market entry for fintech firms”. Bern Media release 2.11.2016 available at: https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-64356.html

Swiss Federal Council, “Federal Council puts new fintech rules into force”. Bern Press release 05.07.2017 available at: https://www.sif.admin.ch/sif/en/home/dokumentation/medienmitteilungen/medienmitteilungen.msg-id-67436.html

Swiss Federal Council, “Federal Council adopts implementing provisions for fintech authorisation”. Bern Media release 30.11.2018 available at: https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-73186.html

Swiss Federal Department of Economic Affairs (2021), “Switzerland’s SME support”. Bern October 2021, available at: https://www.seco.admin.ch/dam/seco/en/dokumente/Publikationen_Dienstleistungen/Publikationen_Formulare/Standortfoerderung/Broschueren/kmu-foerderung-schweiz.pdf.download.pdf/KMU-Fo%CC%88rderung-Schweiz_EN.pdf

Swiss Federal Statistical Office, Press release 24.08.2023, “2.6% increase in Switzerland’s GDP in 2022”, available at: 2.6% increase in Switzerland's GDP in 2022 - Swiss National Accounts 2022 | Press release | Federal Statistical Office (admin.ch)

Swiss National Bank (2013), “Financial Stability Report 2013”, available at: www.snb.ch/en/iabout/pub/oecpub/id/pub_oecpub_stabrep.

Swiss National Bank database; Table 3.selection: Banks, Corporate loans, broken down by company size, available at: https://data.snb.ch/en/topics/banken#!/cube/bakredbetgrbm

Swiss National Bank database; Table 3.selection: Banks, Corporate loans, broken down by company size; secured utilisation opposite customers (mortgages and secured loans) in relation to total utilisation of demands opposite customers for SMEs (up to 249 employees, public sector entities included), available at: https://data.snb.ch/en/topics/banken/cube/bakredbetgrbm?fromDate=2018-12&toDate=2022-12&dimSel=D1(KC5A,KC5B,KC5C,KC5E),D2(T1,H,G),D3(F),D0(AV1)

Swiss National Bank database; Table 3.selection: Interest rates, Interest rates on new loan agreement, Investment loans with fixed interest rates, by product and loan amount, mean value in December, available at: https://data.snb.ch/en/topics/ziredev/cube/zikredvol?fromDate=2018-12&toDate=2022-12&dimSel=D0(FI),D1(K50000100000F,K100000500000F,K5000001MF,K15MF,K515MF),D2(MP0)