SMEs: national solvency measures in the wake of COVID-19 pandemic helped companies avoid bankruptcies

Today, the Commission published a report on national solvency measures for SMEs. According to this report, SMEs and other European businesses have been able to avoid bankruptcies also thanks to a wide range of national solvency measures implemented by Member States in the wake of the COVID-19 pandemic. It highlights how a broad variety of national measures, including debt moratoria, safeguards for employees or fiscal measures are helping to prevent a liquidity crisis from turning into broader solvency crisis for European businesses. The Report builds on experiences shared by national financial experts nominated by their national SME envoys at the workshop ‘SME Envoys Finance – Exchange of good practices on national solvency measures for SMEs’, which took place in September. During this event, Member States shared information about measures taken to address SMEs’ issues with access to finance as a result of the pandemic. The event follows the EU’s Updated Industrial Strategy, which called for more sharing of good practices in this area to support national efforts to aid recapitalisation, debt conversion and SME balance sheet strengthening. The experience presented in the report shows that Member States have predominantly implemented well-established measures such as loans and equity instruments, where National Promotional Institutions and traditional financiers played a key role. The main beneficiaries of such tools have been smaller companies. At the same time, many Member States have also offered new tools such as subordinated loans and mezzanine finance, which are particularly helpful for over-indebted companies, as well as grants and blending schemes which combine repayable and non-repayable support. The full report is available here.