Financing SMEs and Entrepreneurs 2024

18. Hungary

Key facts on SME financing

According to the preliminary data of the Hungarian Central Statistical Office, at the end of 2021, 892 106 enterprises operated in Hungary, 99,89% of which (891 137 enterprises) qualified as SMEs. Hungarian SMEs make up 75% of the total employment and generate61% of the value added.

The COVID-19 pandemic in early 2020 and have created a protracted international crisis situation, which is having impact on the Hungarian economic ecosystem. The rapid economic growth before the coronavirus crisis was ended by a sharp downturn, from which a rapid recovery took place by the second part of 2021 (KSH, 2023).

In February of 2022, the large-scale aggression of Russia against Ukraine escalated in the region vicinity , causing another crisis for the Hungarian economy. As a result of the war, SMEs have to deal with drastically increased energy costs, shortages of basic and raw materials, rising transport costs, regulatory changes, and value chain disruptions. The energy bill increased from EUR 6.8 billion to EUR 16.6 billion.

In 2022, even under such unforeseen circumstances, the level of employment activity and the dynamics of the economy were maintained. The unemployment rate fell to 3.6% compared to 6.2% in the EU. Peak employment was registered in September, with 4.7 million: people employed, which represented an increase of 60,000 people compared to the same period in the previous year and exceeds the employment level in 2019 before the outbreak of COVID (KSH, 2023).

The gross investment rate of non-financial corporations, which is the gross fixed capital formation divided by gross value added in 2021 and 2022 was between 33% and 35%, which is high compared to the values of other EU member states (Eurostat, 2023). In 2022, a record amount of EUR 7 billion of foreign capital (FDI) flowed into the country, and it is estimated to reach up to EUR 10 billion in 2023.

In Hungary, GDP per capita, calculated at purchasing power parity, has increased in recent years. The level of the indicator in the year of the Hungarian accession was 62.8%of the average of the future EU-27 countries, which rose to 75%in 2021, and continued to move closer to the EU average in 2022 (77%) (Eurostat, 2023).

Against all the negative effects that were caused by Russia’s agression against Ukraine the energy crisis and the significant increase in inflation, not experienced for decades, the Hungarian GDP grew by 4.6% in 2022. This value meant a 1.2 percentage point higher growth than the EU’s average (Eurostat, 2023).

Growth was supported by strong performance in the construction sector, expanding retail sales, and the strong performance of the majority of service sectors.

The stock of foreign direct investment capital in Hungary peaked according to the Global Innovation Index Report. The net FDI inflows in ratio of the GDP increased to 61% by the end of 2022, which is a strongvalue in the European Union. (Global Innovation Index Report, 2023).

The 14% annual growth rate of Hungarian banks’ outstanding corporate loans was the fourth highest when compared to other EU countries. Based on preliminary data, outstanding loans to the micro, small and medium-sized enterprise segment expanded by 13% year on year, with significant continued support from the Széchenyi Card Programme (SCP). The average interest rate on market-based corporate loans was generally in line with the rise in interest rates. In 2022 the interest rate was 10,99 % for SMEs and 11,18 for large firms.

A rise in demand for foreign currency loans as well as for short-term loans was seen in this period.

Central banks reacted to the high inflation caused by the war with high interest rates, which had a negative impact on corporate lending. The high interest rates dried up credit markets and justified targeted, stimulative lending by the state. The Government's Széchenyi Card Programme MAX+ and the Baross Gábor Loan Programme supported the SME sector's access to credit financing through state-subsidised loan and guarantee schemes. The state-subsidised loan schemes are typically available at an annual interest rate of 5-6%, while market loans can have interest rates of up to 20%. As part of the fight against soaring interest rates and energy prices, the Government introduced an interest freeze on retail loans, which could help more than 60 000 SMEs. The interest freeze was implemented on November 2022 until December 2023.

Overall, the data suggests a mixed picture for the private equity and venture capital market in Hungary. While there was a decline in the total number of companies receiving investments (from 255 in 2021 to 198 in 2022), there was a significant increase in the total investment amount (from EUR 174.5 million in 2021 to EUR 220.1 million in 2022). The substantial increase in total investment suggests that despite the decrease in the number of companies, there was a focus on backing high-potential companies and making larger investments. This is especially notable in the buyout category, where the investment amount increased significantly from EUR 18.129 million in 2021 to EUR 63.076 million in 2022 (HVCA, 2023).

The growth in start-up investments and VC-backed growth capital also indicates continued interest in supporting early-stage and scaling companies in Hungary. This suggests that investors and venture capitalists are still optimistic about the potential for growth and innovation within the start-up ecosystem. Additionally, the decrease in the number of companies receiving investments could be reflective of a more selective investment approach or consolidation within the market.

A decrease in new funds raised may indicate a potential slowdown in private equity and venture capital activity within the country. It could suggest a decrease in investor confidence or reduced interest in funding startups and growth-stage companies.

The National Capital Holding was registered in November 2022 and started its operations on 1 January 2023. It oversees the operation of the Holding’s funds: the MFB Invest Zrt., the EXIM Invest Zrt. and their subsidiaries and implements new economic stimulative programmes such as the Baross Gábor Capital Programme (NTH, 2023).

Table 18.1. Scoreboard for Hungary

Indicator	Unit	2007	2008	2009	2010	2011	2012	2013	2014		2015	2016	2017	2018	2019	2020	2021	2022
Debt
Outstanding business loans, SMEs	HUF Billion	5 280	5 823	5 379	4 783	4 797	5 014	5 064	4 831		4 942	4 411	4 674	4 691	5 122	5 626	6 199 200	7 175 200
Outstanding business loans, total	HUF Billion	8 466	9 613	8 959	8 770	8 825	7 892	7 648	7 761		7 355	7 073	7 545	8 562	8 715	9 836	10 853 400	12 540 000
Share of SME outstanding loans	% of total outstanding business loans	62.36	60.58	60.05	54.54	54.36	63.53	66.21	62.25		67.20	62.37	59.31	54.7	58.77	57.2	57.12	57.22
New business lending, SMEs	HUF Billion	3 851	4 384	3 660	3 531	3 585	3 870	4 662	4 302		3 665	4 187	4 443	3 743	4 670	4 738	5 569	5 430
Short-term loans, SMEs	HUF Billion	2 473	2 966	2 832	2 775	2 767	3 052	2 654	2 570		2 424	2 708	2 727	2 002	2 417	2 113	2 509	2 313
Long-term loans, SMEs	HUF Billion	1 377	1 418	828	756	818	818	2 008	1 732		1 241	1 478	1 274	1 741	2 252	2 624	3 059	3 117
Share of short-term SME lending	% of total SME lending	64.23	67.66	77.37	78.59	77.18	78.86	56.93	59.75		66.14	64.69	68.16	53.48	51.77	44.61	45.06	42.60
Government loan guarantees, SMEs	HUF Billion	308.8	352.1	409.2	377.1	343.4	251.9	350.0	346.2		348.7	469.3	525.7	725.5	707.1	1 193	1 413	1 526
Government guaranteed loans, SMEs	HUF Billion	381.4	436.4	600.3	472.0	437.2	314.8	458.0	433.8		429.4	568.6	731.0	894.2	934.8	1 561	1 726	1 908
Non-performing loans, total (amount)	HUF Billion	..	..	..	832	1 155	1 272	1 124	961		697	577	526	472	334	336	355	316
Non-performing loans, total	% of all business loans	3.10	4.70	10.10	12.8	17.4	17.7	16.1	13.7		9.6	5.4	3.3	5.5	3.83	3.42	3.6	3.96
Non-performing loans, SMEs	% of all SME loans		5.40	8.90	12.8	15.9	20.5	18.6	20.7		13.7	6.3	4.4	3.5	6.18	1.39	1.14	1.6
Interest rate, SMEs	%	10.19	11.25	12.31	8.99	9.38	9.7	7.4	5.1		4.7	4.2	3.3	2.44	2.97	1.88	3.53	10.99
Interest rate, large firms	%	8.97	10.28	11.07	..	..	8.9	5.9	4.1		2.4	2.8	1.8	2.0	1.3	1.58	2.77	11.18
Interest rate spread	% points	1.22	0.97	1.24	..	..	0.80	1.50	1.00		2.30	1.40	1.50	0.44	1.67	0.30	0.76	- 0,19
Collateral, SMEs	% of SMEs needing collateral to obtain bank lending	..	..	..	..	..	..	..	71		64.5	60.1	53.4	..	..	..	..	..
Rejection rate	1-(SME loans authorised/ requested)	..	..	..	..	..	..	68.8	67		84.4	74,46	53,65	77,79	82,11	67,88	7.70	72.51
Utilisation rate	SME loans used/ authorised	..	..	..	..	..	..	81.5	..		..	..	..	..	..	..	..	..
Non-bank finance
Venture and growth capital	HUF Million ('000 000)	3 949	13 782	720	6 982	11 308	19 361	15 880	18 759		27 742	12 070	11 470	28 661	28 803	45 836	46  836	36 476
Venture and growth capital (growth rate)	%, Year-on-year growth rate	..	249.00	-94.8	869.72	61.96	71.22	-18	18.13		47.89	-56.5	-4.97	149.88	..	..	..	..
Leasing and hire purchases	HUF Million ('000 000)	..	..	..	..	..	..	..	..		..	490 531	483 259	538 370	677 449	734 320	749 761	845 752
Factoring and invoicing	HUF Million ('000 000)	..	..	..	..	..	..	..	..		..	46 472	107 852	66 718	55 208	41 448	32 358	49 341
Other indicators
Payment delays, B2B	Number of days	16.30	19.00	19.00	15.00	22.00	20.00	..	17.40		17.40	4	-1	5	1	18	5	11
Bankruptcies, total	Number	153	168	212	232	279	301	376	644		488	377	322	401	370	225	228	384
Bankruptcies, total (growth rate)	%, Year-on-year growth rate	..	10.35	25.65	9.5	20.4	7.9	24.7	71.3		-24.2	-22.9	-14.4	24.34	-8	-39	1.15	69

Macroeconomic and financing conditions

Thanks to the consistent economic policy pursued in recent years, the Hungarian economy recovered swiftly from the crisis caused by the COVID19 pandemic. In 2021 GDP grew by a record of 7.2%. This dynamic growth was kept in the first half of 2022 as well. Against the negative effects of the energy crisis and the significant increase in inflation, not experienced for decades, the Hungarian GDP grew by 4.6% last year. This value meant a 1.1 percentage point higher growth than the EU’s average (Ministry of Finance: Macroeconomic Overview, June 2023).

The GDP per capita in PPS of Hungary further increased and reached 78% of the EU’s. (Eurostat, 2023). It is important to note that while Hungary in the last two years accomplished these successes that it still has not received EU’s RRF funds, which acts as significant competitive handicap for the country.

Growth was supported by strong performance in the construction sector, expanding retail sales, and a strong performance on the majority of service sectors.

The energy crisis that peaked in the summer of 2022 and the high interest rate environment, made it necessary to provide targeted support to the corporate sector, so that mass layoffs could be avoided, to which the companies' quick adaptability also contributed. It can therefore be stated that the Hungarian labour market proved to be resistant not only to the crisis caused by the coronavirus but also to the energy crisis. Last year, the number of employed people reached 4.7 million, the unemployment rate at the end of 2022 was 3.9%, so it is still among the lowest in the EU. Despite high inflation, real wages were able to rise in 2022 as well.

Hungary's sovereign tax risk classification is in the category recommended for investment by all three major international credit rating agencies.

SMEs in the national economy

Hungary defines SMEs using the standard criteria provided by the European Union1.

According to the estimated data of the SME Performance Review 2023 of the European Commission, at the end of 2022, 714 368 enterprises operated in Hungary, 99.9% of which (713 411enterprises) qualified as SMEs. Hungarian SMEs are responsible for 70.2% of the total employment and generating 56.2 % of the value added.

Based on the European Commission’s data on the business economy that ensures comparability between EU member states, the number of persons employed by Hungarian SMEs somewhat exceeds the EU average in the number of enterprises (Table 19.2.). Meanwhile the job creation and the value added by Hungarian SMEs stands above the EU average.

Table 2. SMEs in Hungary 2022, basic figures

	Number of enterprises			Number of persons employed			Value added
	Hungary		EU-28	Hungary		EU-28	Hungary		EU-28
	Number	Share	Share	Number	Share	Share	Billion €	Share	Share
Micro	679,571	95.1 %	93.5 %	1,069,969	36.6 %	29.4 %	17.3	20.9 %	18.6 %
Small	29,434	4.1 %	5.5 %	547,369	18.7 %	19.4 %	14.4	17.4 %	16.5 %
Medium-sized	4,406	0.6 %	0.8 %	433,834	14.8 %	15.5 %	14.8	17.9 %	16.6 %
SMEs	713,411	99.9 %	99.8 %	2,051,172	70.2 %	64.4 %	46.5	56.2 %	51.8 %
Large	957	0.1 %	0.2 %	872,712	29.8 %	36.6 %	36.3	43.8 %	48.2 %
Total	714,368	100 %	100 %	2,923,884	100 %	100 %	82.8	100 %	100 %

Source: These are estimates for 2020 produced by DIW Econ, based on 2008-2018 figures from the Structural Business Statistics Database as well as provisional data for 2019-2020 from the National Accounts database and the Short-Term Business Statistics Database (EUROSTAT). The data cover the 'non-financial business economy', which includes industry, construction, trade, and services (NACE Rev. 2 sections B to J, L, M and N), but not enterprises in agriculture, forestry and fisheries and the largely non-market service sectors such as education and health. The following size-class definitions are applied: micro firms (0-9 persons employed), small firms (10-49 persons employed), medium-sized firms (50-249 persons employed), and large firms (250+ persons employed).

SME lending

The uncertain economic environment has triggered a slowdown in lending and greater prudence. Credit institutions’ outstanding loans to non-financial corporations grew by 14% in 2022, primarily supported by the credit transactions of large corporations, while a decline was observed in real terms. The 14% annual growth rate of Hungarian banks’ outstanding corporate loans was the fourth highest in an EU comparison. Based on preliminary data, loans to the micro, small and medium-sized enterprise segment expanded by 13% year on year, with significant continued support from the Széchenyi Card Programme (SCP). In 2022, credit institutions’ total outstanding loan and bond portfolio vis-a-vis non-financial corporations grew by HUF 1,672 billion due to transactions, resulting in annual growth of 15% (MNB, 2023).

The ratio of market-based loans within new contracts fell from 84% in the previous quarter to 73%, partly due to year-end demand for SCP MAX.

In parallel, with the increasing interest rate environment, the weighted average interest rate on market-based forint loans to corporates rose sharply versus the previous quarter.

The volume of foreign currency loan contracts rose significantly compared to previous year, and the volume of short-term loan contracts also soared in 2022 Q4.

The volume of new SME loan contracts fell tangibly, particularly in the market of investment loans. In 2022 Q4, the volume of new loan contracts in the SME segment was moderate, amounting to HUF 413 billion, corresponding quarter-on-quarter and year-on-year declines of 28 per cent and 38 per cent, respectively.

The decline in demand for working capital loans was more moderate: the quarterly volume fell short of the prior- year figure by a mere 18 per cent. In 2022 Q3, the volume of new contracts under the Széchenyi Card Programme MAX was negligible, while in 2022 Q4 the programme provided significant support to the new volume, accounting for one-third of new disbursements in the SME sector. In parallel with this, the ratio of market-based loans within new contracts amounted to 78 per cent and 57 per cent in 2022 Q3 and Q4, respectively (MNB, 2023).

Looking ahead, roughly one-third of the banks plan to tighten standards in 2023 H1, and in parallel with this they envisage a fall in demand for forint and long-term loans and a further increase in demand for foreign currency and short-term loans. According to the Bank Sentiment Survey, 47 % of the responding institutions are planning to increase their total corporate loans in 2023 H1, with 37% planning to increase SME loans outstanding in that same period. These planned increases imply a more moderate level of risk appetite. In the next half-year period, the financing of enterprises may also be supported by the Baross Gábor Reindustrialisation Programme, along with the extended Széchenyi Card Programme.

Credit conditions

The most significant market constraints identified in Hungary after the coronavirus pandemic was the problem of access to funds. This was mainly due to the young age of the enterprises resulting in a lack of borrowing history, and the lack of adequate collateral. On the supply side, it was a general problem that banks' lending activity declined significantly after the crisis, while on the demand side, demand for short-term finance increased in parallel with the decline in demand for investment loans. Compared to most member states, financial services in Hungary were expensive, while value added was generally lower, even for the same activities. Borrowing was also expensive, which increased project risks. In Hungary, an entrepreneur had to generate more value added for loan repayment and profit with the same activity than in Western Europe, where the financial system is more developed and financial resources are available at lower costs.

The average interest rate on market-based corporate loans was generally in line with the rise in the interest rate environment. Based on banks’ responses to the Lending Survey, in 2022 Q4 conditions of access to credit generally tightened for corporations. A pick-up in demand for foreign currency loans as well as for short-term loans was seen in this period. Foreign currency loans are taken out primarily by enterprises with foreign currency revenues, and for the time being the ratio of foreign currency loans within new loans is not materially higher than before the onset of the coronavirus. In parallel with corporations’ rising operating expenses, the proportion of short-term loans within quarterly new contracts rose substantially. (MNB, 2023)

The average interest rate level of market-based corporate loans rose in 2022 Q4. The average interest rate level on forint loans below EUR 1 million with variable rate or with up to 1-year initial rate fixation increased to 15.5%. As a result of the interest rate level rising to over 15%, which was last seen in early 2004, the interest rate difference calculated compared to small-amount foreign currency loans bearing market interest rates rose to almost 12 percentage points by the end of 2022.

In 2022, 23% of banks tightened corporate lending conditions. In the first half of 2023, a similar ratio is foreseen if further tightening takes place , with 40% of respondents planning this in relation to small and micro enterprises (MNB, 2023)

Figure 18.1. .Changes in credit conditions in the corporate segment

Net percentage balance of respondents tightening/easing credit conditions weighted by market share

Source: MNB 2023, based on banks' responses

Statlink

Alternative sources of SME financing

Venture Capital and Private Equity

During 2022, EUR 250.2 million was invested into Hungarian companies through 184 transactions. There was a 24.3% decrease in the total number of transactions, and 8% increase in the total invested amount compared to 2021. As a result, the average deal size increased by 43% from 2021 to 2022. The total amount in 2022 was the second-highest value that was reported over the past ten years. (HVCA, 2023)

In 2022, 198 investments were executed by Hungarian investors either in the domestic market or abroad (22% lower than in 2021). Total value of investments increased from EUR 174.5 million to EUR 220.1 million between 2021 and 2022, resulting in a 62% increase in the reported average deal sizes compared to 2021, showing an increasing appetite for larger investments by Hungarian VC-s.

Overall, the data suggests a mixed picture for the private equity and venture capital market in Hungary. While there was a decline in the total number of companies receiving investments from 255 in 2021 to 198 in 2022, there was a significant increase in the total investment amount from EUR 174.5 million in 2021 to EUR 220.1 million, in 2022.

The decline in the number of companies receiving investments, particularly in the seed-stage and later-stage venture categories, indicates a potential slowdown in the creation and development of new businesses. This decline could be attributed mainly to the changing market conditions, and challenges faced by early-stage and mature companies seeking funding.

On the other hand, the substantial increase in total investment suggests that despite the decrease in the number of companies, there was a focus on backing high-potential companies and making larger investments. This is especially notable in the buyout category, where the investment amount increased significantly from EUR 18.129 million in 2021 to EUR 63.076 million in 20222.

The growth in start-up investments and VC-backed growth capital also indicates continued interest in supporting early-stage and scaling companies in Hungary. This suggests that investors and venture capitalists are still optimistic about the potential for growth and innovation within the start-up ecosystem. Additionally, the decrease in the number of companies receiving investments could be reflective of a more selective investment approach or consolidation within the market.

The most concerning fact is the substantial decline in new funds raised for private equity and venture capital investments in Hungary between 2021 and 2022. In 2021, the new funds raised were EUR 465. 888 million, while in 2022, the new funds raised decreased significantly to EUR 69.874 million.

A decrease of this magnitude in new funds raised may indicate a potential slowdown in private equity and venture capital activity within the country. It could suggest a decrease in investor confidence or reduced interest in funding start-ups and growth-stage companies.

Government policy response

The government developed supporting programmes for the corporate segment in order to protect jobs and maintain investment activity. These programmes include energy cost compensation and energy efficiency improvements for energy-intensive SMEs, as well as the factory rescue programme for large companies. Significant resources are available for companies thanks to loans with favourable interest rates.

State-subsidised loans

Central banks reacted to the high inflation caused by the war with higher interest rates, which had a negative impact on corporate lending. The high interest rates dried up credit markets and justified targeted, stimulative lending by the state. The Government's Széchenyi Card Programme MAX+ and the Baross Gábor Loan Programme supported the SME sector's access to credit financing through state-subsidised loan and guarantee schemes.

th a view to mitigating the negative impacts of the large-scale aggression of Russia against Ukraine on the real economy and the energy price shock, and to provide enterprises with funding, the government announced large-scale credit schemes for 2023 as well. Within the framework of the new Széchenyi Card Programme MAX+, launched on 23 December 2022, financial institutions can continue lending to SMEs at a favourable, fixed interest rate. In addition, the Baross Gábor Reindustrialisation Programme, which facilitates lending to primarily larger SMEs and larger enterprises, was also launched on 1th February 2023. The programmes may provide major support this year for growth in corporate loans in the eligible segments.

Széchenyi Card Programme MAX+

The forint loans under the new Széchenyi Card Programme are available at extremely favourable interest rates to micro, small and medium-sized enterprises. Instead of the net customer interest rates of 2.5%–5.5% seen in H2 2022, in the new MAX+ programme, the net customer interest rate is uniformly 5% (with the exception of the agricultural overdraft), which is roughly 10 percentage points lower than market-based interest rates on SME loans typical at the end of 2022. Loan amount is HUF 200-500 million for various loan purposes (HUF 50 million for microloans), while the maximum maturity of working capital loans and investment loans can be 3 years and 10 years, respectively. According to our estimate, utilisation of the programme may be around HUF 600-700 billion this year, accounting for 28-33% of new SME loans, net of overdrafts, registered in 2022.

Baross Gábor Reindustrialisation Programme

Under the Baross Gábor Reindustrialisation Programme (BGRP), launched by Eximbank on 1 February 2023, enterprises have access to funding at a customer interest rate as low as 3 to 6%. The programme was announced with a global amount of HUF 700 billion – equivalent to 18% of the total volume of new corporate loans in 2022 – while only HUF 400 billion of this is linked directly to the new schemes. The remaining HUF 300 billion is connected to Eximbank’s previous “exporters of the future” and “export promotion” products, available in forint at less favourable interest rates. In the case of the new BGRP schemes, which are offered in euros, the annual interest rate is a maximum of 3–3.5%, depending on the loan purpose, while it is 5 to 6% on HUF loans. The programme offers a real alternative to market-based loans, primarily for larger SMEs and large corporations. On the other hand, the new schemes under BGRP are not available to all large enterprises, as some activities belonging to certain NACE categories (e.g. accommodation services and catering; arts, entertainment, leisure, etc.) are excluded. Strong demand for the new loan products was already evident in the first month; due to the exhaustion of the HUF 150 billion working capital loan scheme (MNB, 2023).

Dual transition

In line with the objectives of the European Union, it is also important for Hungary to promote the dual transition (green and digital) in all economic sectors and among all enterprises directly or indirectly involved. The realisation of the double transition is not only a competitiveness aspect and a Hungarian national economic interest, but also a key element of social responsibility.

Therefore, the government is supporting a wide range of SMEs in the implementation of their double transition plans, using both domestic and EU funds. On one hand, the government is helping to promote access to digital technologies and green operations by encouraging investment. On the other hand, we will help to increase knowledge and compliance with modern expectations and legislation through soft tools such as awareness raising, training, mentoring and consulting, with a particular focus on preparing domestic enterprises to comply with ESG directives.

SME Energy Cost and Investment Support Programme 2022-23

The programme announced at the end of 2022 is to help domestic energy-intensive producers, as well as accommodation and hospitality SMEs overcome the difficulties caused by the energy crisis. It supports energy-efficient operations with the investments included in the commitments of SMEs, thereby contributing to implementing the green transition. The HUF 70 billion programme covers the energy costs of applicants (electricity, natural gas, district heating) during the energy crisis and promotes investments in energy efficiency. There are two main components:

(A) supporting operating costs

It means that in the manufacturing sector for six months from October 2022 until March 2023 and in the accommodation and food service industry for three months from January until March 2023, non-repayable direct aid is available to cover half of the monthly energy cost increase of SMEs.

(B) supporting energy transition and energy efficiency investment.

In exchange for the grant, applicants must also undertake to make an energy cost-reducing investment. Under the Széchenyi Investment Loan MAX +, companies can apply for a loan for the implementation of energy efficiency investments, for which they can also apply for a non-reimbursable grant of up to 15% of the total net investment cost of the investment covered by the loan under the "B" component of the SME Energy Cost and Investment Support Programme 2022-2023.

The available amount of support for the two components is up to a maximum of EUR 500 000 if the enterprise is eligible for Crisis Assistance and a maximum amount of EUR 200 000 if the aid(s) is (are) used as de minimis aid.

Interest Freeze

As part of the fight against soaring interest and energy prices, the Government is extending the interest freeze on variable-rate loans for SMEs, which could help more than 60 000 SMEs. National Capital Holding

The National Capital Holding was registered in November 2022 and started its operations on 1 January 2023. The aim of the establishment is to make the operation of state capital funds more efficient and effective, and to create a framework that contributes to the development and strengthening of domestic enterprises, promoting investments and increasing economic performance. The Holding oversees the operation of the funds and implements new economic stimulative programmes such as the Baross Gábor Capital Programme. Through the companies it coordinates – MFB Invest, EXIM Invest and their subsidiaries – it enforces the investment standards necessary for the proper capital financing of domestic enterprises. The aim of the capital funds is to provide adequate and efficient capital financing for domestic enterprises, to strengthen their ability to succeed, to stimulate domestic innovation and job creation, and to promote the expansion of Hungarian firms in regional markets.

Figure 18.2. Trends in SME and entrepreneurship finance in Hungary

Source: See Table 18.1.

Statlink

Table 18.3. Sources and definitions of Hungary’s Scoreboard

Indicators	Definition	Source
Debt
Outstanding business loans, SMEs	Amount of outstanding loans at the end of period (stocks). Gross bank and financial institution business loans to nonfinancial enterprises. In 2007-09 the data contains loans to all SMEs including financial ones, in 2010-12 only non-financial SMEs. Excludes sole proprietorships. Includes lines of credit, overdrafts, leases, business mortgages, business credit cards, factoring and securitised loans.	Hungarian National Bank (From 1 October 2013 the Hungarian Financial Supervisory Authority works within the Hungarian National Bank)
Outstanding business loans, total	Amount of outstanding loans at the end of period (stocks). Gross bank and financial institution business loans to all non-financial enterprises. Excludes sole proprietorships. Includes lines of credit, overdrafts, leases, business mortgages, business credit cards, factoring and securitised loans.	Hungarian National Bank (From 1 October 2013 the Hungarian Financial Supervisory Authority works within the Hungarian National Bank)
Short-term loans, SMEs	New loans (flow) equal to or less than one year. The data doesn’t include the loans of financial institutions. In 2007-09 the data contains loans to all SMEs including financial ones, in 2010-12 only non-financial SMEs.	Hungarian National Bank (From 1 October 2013 the Hungarian Financial Supervisory Authority works within the Hungarian National Bank)
Long-term loans, SMEs	New loans (flow) longer than one year. The data doesn’t include the loans of financial institutions. In 2007-09 the data contains loans to all SMEs including financial ones, in 2010-12 only non-financial SMEs.	Hungarian National Bank(From 1 October 2013 the Hungarian Financial Supervisory Authority works within the Hungarian National Bank)
Government loan guarantees, SMEs	New guarantees (flow) available to banks and financial institutions, guaranteed (partly) by government.	Administrative data from Hungarian Development Bank, Garantiqa Hitelgarancia Zrt, AFGHA (Agrárvállalkozási Hitelgarancia Alapítvány), and the EU SA financed Economic Development Programme
Government guaranteed loans, SMEs	New loans (flows) guaranteed (partly) by government.	Administrative data from the EU SA financed Economic Development Programme
Direct government loans, SMEs	Sum and number of new direct loans (flow) to SMEs from Hungarian Development Bank, microfinance programmes financed from state resources.	Administrative data from the Economic Development Programme
Non-performing loans, total	% of non-performing business loans within total business loan portfolio (90+ days delinquency ratio) to total business loans at the end of the year.	Hungarian National Bank (From 1 October 2013 the Hungarian Financial Supervisory Authority works within the Hungarian National Bank)
Non-performing loans, SMEs	% of non-performing business loans within total business loan portfolio (90+ days delinquency ratio) to total business loans at the end of the year.	Hungarian National Bank (From 1 October 2013 the Hungarian Financial Supervisory Authority works within the Hungarian National Bank)
Interest rate, SMEs	Average annual interest rate for all new SME loans.	Hungarian National Bank
Non-bank finance
Venture and growth capital	Venture and growth capital, total amount invested. Includes seed, start-up, early and later stage expansion capital (excludes buyouts, turnarounds, replacements).	Hungarian Venture Capital Association, (in EUR thousands in 2022)
Other indicators
Payment delays, B2B	Average number of days beyond the agreed date for business-to-business in 2008 and 2009. For 2007, average number of days beyond the agreed date for business-to-business, business-to-customer and public entities. All enterprises.	Intrum Justitia, European Payment Index 2014
Bankruptcies, total	Number of officially published bankruptcies and liquidations per 10 000 taxpayer enterprises.	National Tax and Customs Administration

References

Hungarian National Bank: Trends in Lending, March 2023

https://www.mnb.hu/en/publications/reports/trends-in-lending/trends-in-lending-march-2023

Hungarian Venture Capital Association: Venture Capital and Private Equity update Hungary – 2022

https://www.hvca.hu/documents/HVCA_report_2022_final.pdf

Ministry of Finance: Macroeconomic Overview, June 2023

https://ec.europa.eu/eurostat/databrowser/view/tps00203/default/table?lang=en

https://www.ksh.hu/heti-monitor/foglalkoztatottak-munkanelkuliek.html

https://ec.europa.eu/eurostat/databrowser/view/teina515/default/table?lang=en

https://ec.europa.eu/eurostat/databrowser/view/tec00114/default/table?lang=en,

Notes

← 1.  An SME is an enterprise with fewer than 250 employees and which has an annual turnover less than or equal to EUR 50 million. The definition is stipulated in Law No. XXXIV. of 2004 on Small and medium–sized enterprises and support of their development.

← 2.  This is the total investment value per year in the buyout stage category (Industry statistics).