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The key findings of the report are that:
· Access to finance has been the biggest problem to face SMEs in the last two years. While ACCA welcomes the decisions by central banks across the EU and by the European Central Bank (ECB) to cut borrowing costs, 82 per cent of businesses surveyed expressed concern that banks are not passing on these interest rate cuts to customers, especially SMEs.
· 26 per cent of businesses surveyed said that their debt had increased over the past three years. Having refinanced in 2006 when economic conditions were more favourable, more than a quarter of businesses are potentially now heading for trouble. ACCA recommends that more is done to address this issue. In particular, it recommends that schemes to help businesses with refinancing problems are publicised more widely by the EU and by banks, in order that small businesses know what they are entitled to.
· According to the latest research, businesses expect a gradual improvement in 2010 with finance returning to ‘normal’ by 2011. However, many businesses are not yet recruiting. This may leave them struggling to cope with the upturn on demand. There could also be problems in making up the shortfall in finance.
· Additionally, 20 per cent of businesses do not know when access to finance will return to ‘normal’, and 9 per cent say it never will. Consideration must be given to how those 29 per cent are now operating, and what their business models might look like.
· Asset, debt, and equity finance are more difficult to access. The consequent lack of current investment will cause problems in the eventual upturn. Initiatives such as the JEREMIE scheme, or SMEG facilities, could help but the EU’s financial bodies should encourage demand as well as supply by increasing SMEs’ understanding of these potential sources of finance as alternatives to bank loans. Accountants will play a crucial role in this process by advising SMEs and mediating between them and potential investors.