Analytics, Business, EU – Baltic States

Adopted in June 2008, the "Small Business Act" for Europe (SBA) reflects the Commission’s political will to recognise the central role of SMEs in the EU economy and for the first time puts into place a comprehensive SME policy framework for the EU institutions and the Member States.

SBA aims at improving the overall approach to entrepreneurship, to irreversibly anchor the “Think Small first” principle in policy making from regulation to public service, and to promote SMEs’ growth by helping them tackle the remaining problems which hamper their development.

The Small Business Act for Europe applies to all companies which are independent and have fewer than 250 employees, which is the case of about 99% of all European businesses.

SBA: background documents

- Commission Communication of 4 October 2007: "Small and medium-sized enterprises - Key for delivering more growth and jobs. A mid-term review of Modern SME Policy" (on: eur-lex.europa.eu)

- Commission Communication of 11 November 2005: "Implementing the Community Lisbon Programme - Modern SME Policy for Growth and Employment" (ibid)

- General website: http://ec.europa.eu/enterprise/entrepreneurship/sba_en.htm

Council’s decision

During Competitiveness Council (one of 9 European Council’s configurations) convened on December 1, 2008 the EU Member States committed to implement the SBA by adopting the Council’s conclusions (seee: ec.europa.eu/enterprise/entrepreneurship/).  

The SBA Action Plan, annexed to the Competitiveness Council Conclusions, focuses on short and medium-term measures to improve SMEs’ access to finance, to improve the regulatory environment and to enhance market access for SMEs.

These priority measures are an integral part of the Commission’s response to alleviate the negative impact of economic and financial crisis on enterprises, especially SMEs.

EU Institutional system’s decisions

European Parliament on 4 December 2008 adopted a Resolution on the "Small Business Act" (SBA); see: www.europarl.europa.eu.  The European Council on 11-12 December 2008 supported the full implementation of the Action Plan for the SBA adopted by the Competitiveness Council on 1 December 2008; see: www.consilium.europa.eu.

SBA efforts as well as those for SMEs “activation” have been part of the European Economic Recovery Plan, adopted by the Commission on 26 November 2008. The plan included far-reaching measures to enhance access to finance for SMEs, to reduce their administrative burden and to promote entrepreneurship.

Starting from 2009, the Member States are expected to report on their implementation measures in their Lisbon National Reform programmes; see: ec.europa.eu/growthandjobs.

The European Parliament’s activity

The European Parliamnet has given strong support to the Commission to make the SBA politically binding. It has prepared a report on the SBA (rapporteur: Ms Herczog/PSE/HU) which was adopted in March 2009.

Furthermore, the EPP-ED and Socialist groups put forward a Resolution requesting that the European Council confirm that it would formally approve the Small Business Act and make its

provisions binding. The resolution was adopted on 4 December 2008 with 614 votes in favour, 11 against and 9 abstentions.

The Commission

The SBA includes a large number of measures which require that the Commission take action. The following tables indicate the state of play in implementing these actions:

Legislative proposals and Policy actions, see: ec.europa.eu/enterprise/entrepreneurship/.  

The EU consultative bodies

The European Economic and Social Committee adopted an opinion on the SBA on 14 January 2009. The Committee of Regions adopted an opinion on the SBA on 12 February 2009. Foe further information: See: entr-sba.ec.europa.eu

Main SBA’s features

The Small Business Act is:

- a set of 10 principles which should guide the conception and implementation of policies both at EU and national level. This is essential to create a level playing field for SMEs throughout the EU and improve the administrative and legal environment to allow these enterprises to release their full potential to create jobs and growth;

- an ambitious package of concrete and far reaching new measures including 4 legislative proposals which translate these principles into action both at the EU and the Member States’ level;

- an official document adopted by the European Council to ensure the full political commitment of both the Commission and the Member States to regular monitoring its implementation.

SBA and SMEs connections

Some examples of what the SBA can do for SMEs follows below. The SBA aims to:

= Create an environment within which entrepreneurs can thrive and entrepreneurship is rewarded with “Erasmus for young entrepreneurs”.

New and promising entrepreneurs can now take advantage of cross-border mobility, as well as gaining experience and insight by spending time in an SME in a different country.

Honest entrepreneurs who have faced bankruptcy should quickly be given a second chance, by promoting a positive attitude in society towards a fresh start.

= Design rules according to the "Think Small First Principle"

All new legislative and administrative proposals at European and national level should be subjected to an “SME test” to assess their impact on SMEs. Where this impact is considered negative, Member States will be able to use measures such as derogations, transition periods and exemptions in particular from information and reporting requirements.

= Adapt public policy tools to SME needs

A new code of best practice for public procurement will facilitate SMEs’ access to public procurement contracts. It offers solutions to difficulties faced by small companies by improving access to information about public contracts and how to bid on-line, reducing excessive financial requirements, and cutting the paperwork.

A higher level of state aid will be allowed to smaller companies, and rules for state aid to SMEs will be made simpler. National governments also do not need to notify this support to the Commission. Overall, these measures increase the possibilities for state aid to SMEs.

= Facilitate SMEs’ access to finance

The European Investment Bank Group will increase its range of financial products offered to SMEs, particularly mezzanine finance. In addition, more funds will be made available by the Commission for micro-credit and access to cross-border venture capital will be facilitated.

Late payments can be crippling for SMEs. To simplify existing provisions and ensure that SMEs get paid within 30 days, the Commission is proposing a revision of the Late Payments Directive.

= Help SMEs to benefit more from the opportunities offered by the Single Market and third-country markets

A new statute for a European Private Company (EPC) will allow SMEs to start up and operate according to the same company law provisions throughout Europe. See: ec.europa.eu/internal_market/company/epc.

The Commission’s new proposal on lower VAT rates for labour intensive services will have a positive effect on SMEs offering services such as hairdressing, catering, and repair services.

A public on-line consultation was launched via the IPM tool in the first half of 2008. More than 500 contributions were received as well as a number of position papers from SME stakeholders, national and regional administrations. All these inputs have been taken into account in the preparation of the "Small Business Act " for Europe.

New steps towards SBA:

- The Committee of Regions endorsed the "Small Business Act" for Europe on 12 February 2009;

- The European Economic and Social Committee endorsed the "Small Business Act" for Europe on 14 January 2009.