Financial Supports Provided to SMEs Within the Context of the European Union's Budget

Financial Supports Provided to SMEs Within the Context of the European Union's Budget

Seda Sonmez Ozekicioglu (Akdeniz University, Turkey) and Filiz Yetiz (Akdeniz University, Turkey)
DOI: 10.4018/978-1-7998-1188-6.ch019

Abstract

Along with their flexible production structures and rapid adaptation to technological innovations in the world economic race, SMEs are among the prominent wheels of both the EU economy and the whole world economy. In this chapter, the importance and the size of SMEs which contribute to production capacity, productive investments, economic growth, and national income, as well as employment and many other areas, are explicated using the current data; hence, the EU financial support programmes organized regarding the financial problems of SMEs are introduced. In this respect, the shares of the funding programmes offered to SMEs within the EU budget over the period from 2014 to 2020 in the Union's budget are assessed, and recommendations are made for the years 2021-2027.
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Introduction

Small and Medium-Sized Enterprises (SMEs), which contribute positively to regional development as well as economic growth in rapidly changing world markets along with the innovative technological processes and manufacturing methods, are of utmost importance for the economies of both developed and developing countries. Especially following the process of opening to international markets, SMEs have become involved in dynamic sectors in terms of contributions to the worldwide competitiveness. SMEs for the European Union (EU) are also highly esteemed for their easy adaptation to innovations, rapid responsiveness to changing demands, the creativity of various employment opportunities, and ability of fast recovery from economic fluctuations, financial crises, and instability by courtesy of flexible manufacturing mechanisms.

Along with all its affirmative aspects, national and international SMEs may have encountered funding problems in both developed and developing countries. For instance, banks’ perception of SMEs as risky and aggravation of their lending criteria lead to incomplete or missing markets in normal conditions, as well as in economic crisis periods. In this context, upon considering the values-added they provide to national economies, alternative funding opportunities, and financial institutions that can provide funding for SMEs have been needed. In order for SMEs to meet their financial needs, the EU has developed financial programmes that address such crucial issue by generating funds for SMEs in both member and candidate countries through various funds established in the Union’s budget.

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