21 june 2013
AECM Annual Seminar Rome, Italy
AECM position on prolongation of Temporary State Aid Framework - Oct 2010News - 25/10/2010 - Brussels
On 25th October, AECM responded to the European Commission's consultation on the prolongation of the Temporary State Aid Framework. While AECM welcomes the extension of the Framework, it calls for maintaining all the provisions relevant to guarantee instruments, such as the higher ceiling for compatible aid of €500.000 and the increase guarantee coverage rate limit of 90%. Without these elements, the extended Framework would only have a marginal impact on SME access to finance.
AECM underlined the importance of the Temporary Framework for specific anti-crisis guarantee measures, addressing the needs of SMEs with regard to access to finance in the context of the financial and economic crises. All of the elements of the Temporary Framework have been utilized so far, e.g. the raised limit of the state aid equivalent, amounting to € 500.000 (€ 15.000 for undertakings active in the primary production of agricultural products), as well as the higher ceiling for the maximum coverage rate of 90% of the underlying loan and the possibility to lower the guarantee premiums. All these aspects have been key to encourage the banking sector to maintain its lending activity and to make loan guarantees less onerous for SMEs in the present difficult market environment.
AECM points out that while a recovery is under way, SMEs experience a time lag with regard to the impact of the crises and that, contrary to larger companies, they still experience major difficulties in accessing finance. This impact is very variable from country to country and exacerbated in the medium term by a number of factors, such as the impact of the new Basel III rules, weaker own funds and ratings of SMEs as a result of the crisis and future rising interest rates.
AECM welcomes the fact that the possibility to provide a lower guarantee premium. However, aside from this point, the draft Communication has eliminated most key aspects of the Temporary Framework, that were effective in encouraging banks to maintain lending to SMEs. Without these elements, the impact on bank lending to SMEs will be far lower. The key provisions of the current Framework that give incentives to SME bank lending should be maintained until the end of 2011, among which the higher level of compatible limited amount of aid of € 500.000 (€15.000 for agriculture and rural SMEs); the higher guarantee coverage rate of 90% versus 80%.
There are concerns about the time table for implementation of the prolongation of the Temporary Framework. Ideally, the implementation into national law would need to be effective in December, in order to allow a seamless continuation of the anti-crisis measures. Otherwise, there is a risk of a gap situation, i.e. an interruption of the guarantee programmes, which is difficult to manage from a commercial point of view as well as difficult to communicate to the beneficiary SMEs.
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