09/05/2011

Reviewing the Small Business Act
Meeting new challenges and cutting red tape

What is the Small Business Act?

The Small Business Act is a policy framework originally adopted in June 2008, which aims at improving the overall conditions for SMEs throughout the different policy areas of the EU.

It is currently being reviewed to take stock of what has happened since it was originally adopted and adjust it to the new challenges SMEs face, particularly as a result of the economic crisis. The review also develops existing actions from the EU 2020 Strategy (the EU's plan for sustainable growth) further. Looking forward, the review by the European Commission is focused on smart regulation, access to finance, market access, how to help SMEs contribute to a resource-efficient economy as well as entrepreneurship and job creation.

Why the need to review?

Bendt Bendtsen MEP, Chairman of the SME Circle of the EPP Group underlines the importance of SMEs and the necessity to adjust the Small Business Act: "Small and Medium-sized Enterprises represent a huge part of the European economy. They differ from small one-man-shops to larger family-owned businesses, from plumbers to technological start-ups that produce applications for your smart phone to medical suppliers. What unites SMEs is a common difficulty with handling the information demands from public authorities and their frustration with the need to hire expertise just to understand the technical and legal requirements they need to comply with, in order to stay in business. The Small Business Act will help improve that and look at other things that hamper growth for SMEs."

The Small Business Act applies to all independent companies that have fewer than 250 employees. This equals 99% of all European businesses, affects 67% of all jobs in the EU, and represents a large part of the European economy and huge potential for growth. At the heart of the Act is the idea that the EU should "think small first" when legislating. Beyond that, it aims at improving the overall approach to entrepreneurship and promoting SME growth by helping them tackle the problems which hamper their development.

What is the EPP Group pushing for?

The EPP Group insists that the Small Business Act be adjusted so that it takes into account that SMEs in particular have suffered from a drying-up of financial and economic resources, as a result of the crisis. There is a need to focus on improving SME access to finance from grants, guarantees and equity financing, and to promote SME growth. At the same time, it is important to maintain the SME-friendly Competitiveness and Innovation Framework Programme (the CIP) after 2013 to make sure we have a ready-made instrument for SMEs that encourages innovation and provides access to finance and business support services.

Another important aspect in the Small Business Act for the EPP Group is access to markets for SMEs. SMEs should have easy access to public procurement and the number of SMEs that participate in public contract award procedures should increase dramatically.

Last but not least, a priority for the EPP Group is cutting red tape, which can suffocate SMEs. Outsized bureaucratic burdens present a major impediment for SMEs. Authorities should not duplicate demands for information, and the "only once" principle should apply, to make sure that companies do not have to report identical information to different authorities. Furthermore, the Commission's SME test should be applied properly and consistently in all new legislative proposals to ensure all new legislation is evaluated in terms of its potential impact on SMEs.

What next?

MEPs will debate the review in plenary in Strasbourg on Wednesday 11 May.