Romanian SMEs at the financing crossroads

Newsroom 28/06/2013 | 09:30

Even though they ensure more than 65 percent of the total number of jobs, SMEs in Romania are not innovative or competitive enough, lacking both financing and a fitting entrepreneurial culture. Experts present at the SMEs How To event organized by BR made an overview of the financing opportunities available for SMEs.

At the moment, nearly 23 percent of Romanian active SMEs are located in the Bucharest- Ilfov area. Thus, there are over 50 SMEs per 1,000 inhabitants in the Bucharest- Ilfov area while the South-Western region Oltenia is at the opposite pole, with 16 SMEs per 1,000 inhabitants, according to Peter Barta, executive director at Fundatia Post-Privatizare.

”Entrepreneurial education should become a strategic target but there are few such programs. Most entrepreneurs see participation in such programs as a cost when in fact they should see this as an investment,” said Barta.

Startups in Romania find it very hard to take off, because there are not enough financing opportunities. Access to bank loans is restrictive and alternative sources of financing are lacking, said Barta.

”Romania is among the few countries that does not have a fund for early-stage financing. Unfortunately, many entrepreneurs who have obtained early-stage financing obtained this from investment funds abroad,” he said.

Giving the example of Sillicon Valley, Barta said the Sillicon Valley Bank offers financing for startups and works with incubators. ”In Romania there are few incubators and many of them are in agony,” he said.

”One positive thing is the significant growth of micro-lending, because these solutions help the entrepreneurial process,” said Barta.

Romania is on the 5th place in Europe in the number of beneficiaries of micro-lending and this is growing.

Roxana Craciun, counselor at the Direction for Implementing Projects and Programs for SMEs, in the Ministry of Economy, made an overview of the seven development programs available for SMEs in Romania, which are financed from the state budget.

These include a program for supporting craftsmanship, a program for stimulating young entrepreneurs to set up and develop small companies, the Mihail Kogalniceanu program for SMEs, a program for developing entrepreneurial abilities in young people and facilitating access to Start-type financing, a program for developing entrepreneurial culture in women managers, and a program for setting up and developing technology and business incubators.

The Romanian state offers several programs for non-reimbursable financing. Roxana Mircea, managing partner at REI Finance Advisors made an overview of the available such programs. ”We are approcahing the end of a government decision that financed projects worth EUR 5 million. At the end of July- the beginning of August, there is a deadline for submitting projects for this scheme,” she warned.

She also spoke about the Minimis financing scheme via which SMEs can obtain at most EUR 200,000 non-reimbursable financing.

About RON 400 million will be allocated in total as part of this scheme and the session for applications opens on August 16.

”This scheme functions extremely well compared to European projects. The reimbursement is done within 2 months since submitting the acquisition procedure and the proof of payment. The reimbursement is done in stages or all at once.

“There is fierce competition and the scheme works on the first come first served principle.”

Eligible candidates are firms which ended 2012 on profit or companies founded in 2013 that had activity up to this point.

”If we managed to replace financing on beaurocratic structures with a structure of setting up some revolving funds that should come up with equity for SMEs, there will be a dynamism of the people’s appetite for entrepreneurship,” said Sergiu Negut, partner in Wanted Transformation.

Otilia Haraga

 

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