Financing SMEs and Entrepreneurs 2024

Reader’s Guide

Indicators

SME and entrepreneurship financing trends are monitored through core indicators, listed in Table 1, selected on the criteria of usefulness, availability, feasibility and timeliness (see the Annex for a detailed description). In detail, the core indicators describe and monitor the following key dimensions:

Table 1. Core indicators in Financing SMEs and entrepreneurs, 2022

Core indicators	Unit	What they show
The allocation and structure of bank credit to SMEs
Outstanding business loans, SMEs	Volumes in national currency	SME demand for and access to bank credit. A stock indicator measuring the value of an asset at a given point in time, and thus reflecting both new lending, as well as bank loans that have accumulated over time along with loan repayments.
Outstanding business loans, total	Volumes in national currency
Share of SME outstanding loans	% of total outstanding loans
New business lending, total	Volumes in national currency	SME demand for and access to bank credit. A flow indicator, measured over one year, which tends to capture more strongly short-term developments and is therefore more volatile than stocks.
New business lending, SMEs	Volumes in national currency
Share of new SME lending	% of total new lending
Short-term loans, SMEs	Volumes in national currency	The structure of SME debt, i.e. the share of outstanding credit with an initial maturity of less than one year and more than one year, respectively. This could be considered as a proxy to gauge the purpose of SME bank loans, i.e. for operational and investment needs.
Long-term loans, SMEs	Volumes in national currency
Extent of public support for SME finance
Government loan guarantees, SMEs	Volumes in national currency	These indicators illustrate the extent and uptake of government programmes and instruments supporting SMEs' access to finance.
Government guaranteed loans, SMEs	Volumes in national currency
Direct government loans, SMEs	Volumes in national currency
Credit costs and conditions
Interest rate, SMEs	%	The cost of SME loans and how it compares to large firms.
Interest rate, large firms	%
Interest rate spread	Percentage points
Collateral, SMEs	% of SMEs needing collateral to obtain bank lending	Proxies the conditions SMEs face when applying for bank credit.
Percentage of SME loan applications	SME loan applications/ total number of SMEs, in %	The (unmet) demand for and utilisation of credit by SMEs, and willingness of banks to lend.
Rejection rate	1-(SME loans authorised/ requested), in %
Utilisation rate	SME loans used/ authorised, in %
Non-bank sources of finance
Venture and growth capital investments	Volumes in national currency and year-on-year growth rate in %	The take-up and ability to access non-bank finance instruments, including external equity for start-up, early development and expansion stages, as well as asset-based finance, such as leasing, hire purchases, factoring and invoice discounting.
Leasing and hire purchases	Volumes in national currency
Factoring and invoice discounting	Volumes in national currency
Financial health
Non-performing loans, total	% of total business loans	The incidence of late or non-payments for SME loans, compared to the overall corporate sector. This proxies the (relative) riskiness of lending to SMEs.
Non-performing loans, SMEs	% of total SME loans
Payment delays, B2B	Number of days	The occurrence of payment delays in the B2B sector, i.e. the difficulty in paying and being paid, to capture the extent of cash flow problems.
Bankruptcies, SMEs	Number and year-on-year growth rate in %	A proxy for the overall business environment in which SMEs operate and the ability of small firms to survive economic downturns and credit crunches.

Data collection

The Scoreboard data are provided by experts designated by participating countries. Most of the indicators are derived from supply-side data provided by financial institutions, statistical offices and other government agencies. This is supplemented by national and regional demand-side surveys in order to provide a more comprehensive view of the evolution of financing trends and needs. Indicators cover access to finance for employer firms, that is, for SMEs which have at least one employee, and are operating a non-financial business. The data in the present edition cover the period 2007 to 2022. Specific attention is placed on developments occurring in 2021, 2022 and the first half of 2023. In addition, information on government policies to ease SMEs’ access to finance is also collected on a systematic basis.

The published print version includes a chapter on emerging trends in SME and entrepreneurship finance, drawing on information provided by participating countries, a thematic chapter, focusing for this edition on the sustainable finance landscape for SMEs and the strategies and approaches from financial institutions towards its SME clients. The printed version also includes an annex and a two-page snapshot for every participating country. This snapshot summarises the state of play regarding SME access to finance in each country, while the full country profiles will be available on the OECD website only.

Cross-country comparability

At the individual country level, the Scoreboard provides a coherent picture of SMEs' access to finance over time and monitors changing conditions for SME financing, as well as the impact of policies. There are limits to possible cross-country comparisons, however. Firstly, the statistical definition of an SME differs among participating countries; while the European Union definition is the most commonly used, participating countries outside of the Union usually define an SME differently, which complicates cross-country comparisons (see the Annex for detailed definitions of SMEs across participating countries).

In addition, differences in the definition and coverage for indicators hamper comparability, with a number of countries not able to adhere to the “preferred definition” of the core indicators. A proxy has been adopted in these instances. For this reason, all country profiles include a table, which provides the definition adopted for each indicator and a reference to the data source. Despite these limitations, it is still possible to compare general trends across countries, as the differences in the exact composition of the single indicator are muted when evaluating rates of change. Country profiles in the printed edition of this publication are abbreviated to two pages with key facts and the table with core indicators, while the full profiles remain available online.

Methodological advances and recommendations for data improvements

There have been important methodological and structural improvements in recent editions of this report. More detailed information regarding the sources and definitions of core indicators have been provided for participating countries. Since June 2016, the Scoreboard data are available on the OECD.Stat website. Data on core indicators can be consulted, downloaded and put to further use, thereby addressing a longstanding demand to improve access to the data, and exposure of the publication to a wider audience. In addition, more information is provided on the uptake of financial instruments other than straight debt, and further endeavours will be undertaken in this area for future editions of the publication.

Furthermore, the Scoreboard now seeks to collect disaggregated data on SME and entrepreneurship finance and financing conditions. The 2023 Scoreboard Highlights was the first edition to present the first early findings and this 2024 edition presented more insights on the disaggregated data by TL2 regions. These efforts, in addition to being in line with the 2022 Updated High-Level Principles on SME Financing and the OECD Recommendation on SME Financing, are a crucial improvement for the Scoreboard, considering the significant heterogeneity of the SME population and the impact that these underlying characteristics have on access to finance and financing conditions. Data collection and related analysis has started by geographical location and by gender of the principal owner, and efforts to improve country and time coverage are continuously being pursued. In particular, additional efforts are needed on the collection of gender disaggregated data, as few countries appear to be collecting this information, despite its high policy relevance. In this context, the OECD is also collaborating with other international initiatives which seeks to strengthen information on access to finance by women-owned businesses.

The collection of additional dimensions (e.g. sector of operation and firm size) is foreseen to be incorporated in the near future. Overall, the incorporation of these dimensions will provide a better understanding of SME and entrepreneurship finance trends, would significantly continue to strengthen the usefulness of the Scoreboard, contribute to a better understanding of the heterogeneity of SME segments, enrich the evidence base and support policy efforts focused on SME and entrepreneurship financing.

Finally, efforts are ongoing to increase the coverage of participating countries and to harmonise the data from already participating countries.

A summary of recommendations to further improve data collection and reporting of core indicators are outlined in Box 1 (see the Annex for a more detailed discussion). Actions in these areas can enable countries to progress in the harmonisation of definitions and facilitate inter-temporal and cross-country analysis of trends in SME and entrepreneurship finance.

Box 1. Recommendations for improving the reporting of core indicators

1. Improve reporting of SME loan variables by:

• Systematically separating reporting of financial information for non-employer and employer-firms;

• Providing both stock and flow data for SME loans;

• Detailing the loan composition, indicating the different underlying products (e.g. overdrafts / lines of credit / leases / business mortgages or credit cards / securitised loans), and disclose such elements in the loan definition.

2. Fill gaps in available data and work towards more comprehensive information for other core indicators in the Scoreboard, including:

• Offer more comprehensive information on government programmes that ease SME access to finance:

  • In the context of specific measures on greening and digitalization, provide information on new or expanded government schemes, including information on eligibility criteria and duration, and if possible, amount of total funding allocated to those schemes. Provide the same information for the specific countries experiencing high energy costs and launching financing schemes for SMEs.

    • Specify the figures that can be attributed to schemes in response to the COVID-19 crisis (e.g. new government guarantee schemes, new lines of direct lending) in the reporting of Scoreboard indicators.

• Provide data on non-performing loans for SMEs and for large firms, the latter to be used as a benchmark;

• Provide more comprehensive data on venture capital investments, including trends by stage and sector;

• Compile SME-specific information on the uptake and use of asset-based finance (versus other beneficiaries);

• Collect information on SME loan fees, in addition to interest applied on the loans;

• Detail the definition of collateral and improve reporting, using demand-side surveys to compensate for lack of supply-side data;

• Advance efforts to compile more disaggregated data on the Scoreboard core indicators, notably by sector of operation, firm size, gender of principal owner and geographical location.

  • • • On the collection of gender-disaggregated data, provide figures distinguishing between firms that are primarily owned (not managed) by women (e.g. 51% owned by women), firms primarily owned by men, and “dual-owned”.

      • On the collection of subnational level data, provide figures at the TL2 level.

3. Work to improve data collection on additional non-bank financing instruments, such as online alternative finance, as well as to provide more comprehensive data on alternative sources of equity financing, including business angel investments, with a view to incorporating this information in the set of core indicators in the future.