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

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.