The Slovenia Times

Central Bank Urges Equity Financing Options for Small Companies


They need more options for equity financing, which would foster investment, generate profit and reduce excessive debt.

The central bank argued SMEs need an organised alternative for financing or different financial institutions that would reduce their high dependency on bank loans.

While playing an important role in the economy, these companies have so far not been involved in the systemic resolution of corporate debt and bad claims.

They were hit in the second phase of the crisis and while the share of SMEs in long-term loans meant mostly for investment increased last year, the volume of these loans continues to fall.

Small companies had higher debt compared to large ones but after 2008 they deleveraged faster. They however met their commitments with greater risks than big ones. Those dealing with real estate, construction and hospitality had the highest debts.

SMEs's share of liabilities to banks in all financial liabilities stood at 53% compared to 66% for big ones, which indicated that they have a harder time accessing bank resources.

In the crisis this became even more pronounced and in recent years SMEs have mostly focused on current operations, which is reflected in a rising share of short-term bank loans.

Last year, small companies accounted for 74% of the excessive debt of all companies in Slovenia, which is on par with 2013. In 2014 their excessive debt decreased from EUR 6.8bn or 18.9% of GDP to EUR 6bn or 16.1% of GDP.

Of all companies in Slovenia last year, 99% were SMEs, employing 261,000 or 63% of gthe workforce and generating 54% of added value. Between 2008 and 2014 their number increased by 12%, while the number of large companies was down 20%.


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