# SMEs which receive EU funding significantly outperform those that don’t
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2019-02-26
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: EU-Guaranteed Loans Drive Impressive SME Growth
Meta Description: Discover how SMEs benefit from EU-guaranteed loans, with increased asset, sales and productivity growth, and reduced default rates. Learn more now.
URL: https://financedigest.com/smes-receive-eu-funding-significantly-outperform-donthtml

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SMEs which receive EU-guaranteed loans significantly outperform those that don’t, in areas including asset, sales and productivity growth, according to a new research report from emlyon business school and Politecnico di Milano School of Management.

The report assesses the short and long-term economic effects that EU guaranteed loans have on beneficiary firms. These loans were provided to SMEs under programs funded by the European Commission and managed by the European Investment Fund (EIF).

Fabio Bertoni and Anita Quas, professors of finance at emlyon, and Massimo G. Colombo, professor of entrepreneurship and entrepreneurial [finance at Politecnico di Milano School of Management](https://www.financedigest.com/how-application-management-can-help-tackle-the-finance-industrys-carbon-emissions.html "How application management can help tackle the finance industry’s carbon emissions"), analysed data collated on over 85,000 loans granted to 57,000 individual French SMEs between 2002 and 2016, for a total amount of EUR 4.65bn.

During the study, SMEs who received these loans were matched with a ‘twin’ firm that had not benefited from this scheme. The twin [firms were almost identical to beneficiary SMEs in terms of industry](https://www.financedigest.com/britain-considers-energy-bill-subsidy-for-industrial-firms.html "Britain considers energy bill subsidy for industrial firms"), location, current and predicted growth, employment rate, size and age. These twin firms gained funding through more traditional [bank loans](https://www.financedigest.com/ant-group-starts-to-differentiate-consumer-loan-business-jiebei-from-bank-loans.html "Ant Group starts to differentiate consumer loan business Jiebei from bank loans"), other forms of external investment such as venture capital, or did not receive any added funding at all.

Professor Massimo G. Colombo says,

“Most [banks act](https://www.financedigest.com/explainer-why-is-bank-of-england-acting-again-what-next-in-the-uk-crisis-2.html "Explainer-Why is Bank of England acting again? What next in the UK crisis?") very conservatively. If they think a venture has any possibility of failing or being too risky, it is likely they will be very cautious in giving a loan. This means that many SMEs which are perhaps riskier ventures, but have the capacity to be successful, are unlikely to receive funding. These EU-guaranteed [loans step in as a security buffer to banks](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans"), ensuring potentially profitable SMEs receive the funding they deserve.”

The study found that over the [period](https://www.financedigest.com/smart-home-devices-market-is-expected-to-grow-at-a-healthy-cagr-of-over-18-during-the-study-forecast-period-2021-2031.html "Smart Home Devices Market is expected to grow at a healthy CAGR of over 18% during the study forecast period 2021-2031") studied, SMEs who received these EU-guaranteed loans outperformed those who didn’t by experiencing on average a;

- 9% [additional asset growth](https://www.financedigest.com/antimicrobial-protection-additives-for-adhesives-market-incredible-possibilities-growth-analysis-and-forecast-to-2028.html "Antimicrobial Protection Additives for Adhesives Market Incredible Possibilities, Growth Analysis And Forecast To 2028")
- 7% additional [sales growth](https://www.financedigest.com/uk-retail-sales-growth-slides-as-omicron-hits-cbi.html "UK retail sales growth slides as Omicron hits – CBI")
- 8% additional employment growth
- More than 2.5% [additional productivity growth](https://www.financedigest.com/animal-feed-additives-market-regional-industry-segmentation-analysis-by-production-consumption-revenue-and-growth-rate-by-2031.html "Animal Feed Additives Market Regional Industry Segmentation, Analysis by Production, Consumption, Revenue and Growth Rate by 2031")
- 7% decrease in the likelihood of defaulting.

Professor Fabio Bertoni says,

“The results are consistent with the fact that one of the biggest blocks to [SMEs’ growth is a lack-of financing](https://www.financedigest.com/forecast-based-financing-for-smes.html "Forecast-based financing for SMEs"), and experiencing financial constraints. In fact, 30%-40% of EU SMEs [cited limited](https://www.financedigest.com/natwest-limits-customers-crypto-transfers-citing-scam-concerns.html "NatWest limits customers’ crypto transfers, citing scam concerns") funding as a very significant reason for lack of growth in an EIF survey. These loans alleviate SMEs financial constraints, easing the pressure on [firms and allowing them to invest](https://www.financedigest.com/toshiba-in-talks-with-four-investment-firms-for-strategic-ideas-sources.html "Toshiba in talks with four investment firms for strategic ideas -sources") in what they deem the most important areas for growth.”

Previous research has stated that 85% of new jobs in the EU come from SME’s. The [researchers suggest](https://www.financedigest.com/new-research-suggests-over-13-million-brits-were-inadequately-managed-while-working-remotely.html "NEW RESEARCH SUGGESTS OVER 13 MILLION BRITS WERE INADEQUATELY MANAGED WHILE WORKING REMOTELY*") that it is no surprise that schemes such as these EU-guaranteed loans are beneficial to the EU in terms of job creation.

_If you would like more information on the study, or to speak with either of the professors, please get in touch with Peter Remon at BlueSky PR_ [_peter@bluesky-pr.com_](mailto:peter@bluesky-pr.com)


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