36. Poland

Key Facts on SME financing

Since the financial crisis of 2009, Poland's GDP has grown constantly. It reached 5.1% in 2018. SMEs contribution to GDP is steadily increasing. The banking sector is overall sound.

SMEs are the backbone of the Polish economy. In 2017, Polish SMEs employed over 6.7 million employees – 68.3% of all enterprise employees – and accounted for 55.6% of value added by all enterprises and 46.3% of all investment outlays.

The stock of SME outstanding loans in 2018 decreased year-on-year and currently accounts for 53.7% of total business lending. The vast majority of SME loans are long-term loans. The share of SME non-performing loans decreased for the sixth year in a row in 2018.

Venture capital and growth investments have increased significantly since 2014. In 2018, they grew by 78.2% year-on-year.

SME interest rates increased compared to 2017, from 2.95% to 3.4%. The figure in 2018 is lower by 1.9 percentage points than the value at its peak, in 2008. Interest rates for large enterprises stood at 2.9%. The interest rate spread reached 0.5 percentage points in 2018.

Poland offers multiple instruments to support SMEs’ access to finance, both at the national and at the regional level. Under the De Minimis Guarantee Scheme, SMEs can obtain loan guarantee covering up to 60% of the loan amount, up to a maximum of PLN 3.5 million. Since its launch in 2013, over 141 000 thousands SMEs have been granted a guarantee under this scheme.

Guarantees and other forms of financial support for SMEs are also offered as part of European Union (EU) cohesion funds as well as other EU programmes (e.g. Programme for the Competitiveness of Enterprises and small and medium-sized enterprises – COSME, Programme for Employment and Social Innovation – EaSI).

Table 36.1. Scoreboard for Poland
Indicator	Unit	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Debt
Outstanding business loans, SMEs	PLN Billion	..	125.31	127.22	127.00	159.02	164.81	163.93	175.63	185.78	193.63	206.57	208.48
Outstanding business loans, total	PLN Billion	..	233.28	222.08	219.69	264.51	272.25	277.96	300.92	327.27	344.93	366.02	388.25
Share of SME outstanding loans	% of total outstanding business loans	..	53.72	57.29	57.81	60.12	60.54	58.97	58.36	56.77	56.14	56.44	53.70
Outstanding short-term loans, SMEs	PLN Billion	..	31.93	31.25	31.52	38.45	39.88	37.37	40.46	41.60	42.81	43.93	39.30
Outstanding long-term loans, SMEs	PLN Billion	..	90.18	93.24	93.73	116.22	122.23	123.43	130.25	138.33	145.05	156.36	161.89
Share of short-term SME lending	% of total SME lending	..	26.15	25.10	25.17	24.86	24.60	23.24	23.70	23.12	22.79	28.09	24.27
Government loan guarantees, SMEs	PLN Billion	..	..	..	..	..	..	7.00	9.65	8.90	9.36	9.91	10.17
Government guaranteed loans, SMEs	PLN Billion	..	..	..	..	..	..	12.24	17.43	15.86	16.43	17.80	18.17
Non-performing loans, total	% of all business loans	..	6.50	11.58	12.40	10.37	11.78	11.61	11.33	10.31	9.11	8.28	11.32
Non-performing loans, SMEs	% of all SME loans	..	7.46	13.35	14.59	12.33	13.06	12.99	12.75	12.29	10.97	10.04	8.70
Interest rate, SMEs	%	..	5.37	3.82	4.31	4.57	4.86	3.85	3.52	3.00	2.86	2.95	3.43
Interest rate, large firms	%	..	5.62	4.28	4.00	4.45	4.74	3.83	3.40	2.90	2.77	2.76	2.92
Interest rate spread	% points	..	-0.25	-0.46	0.31	0.12	0.12	0.02	0.12	0.10	0.09	0.19	0.51
Collateral, SMEs	% of SMEs needing collateral to obtain bank lending	..	..	..	..	..	..	..	..	..	38.92	30.33	..
Percentage of SME loan applications	SME loan applications/ total number of SMEs	..	..	..	..	..	..	..	..	..	78.55	80.12	..
Rejection rate	1-(SME loans authorised/ requested)	..	..	..	..	..	..	..	..	..	37.20	31.78	..
Utilisation rate	SME loans used/ authorised	..	..	..	..	..	..	..	..	..	66.44	61.83	..
Non-bank finance
Venture and growth capital	EUR Million	147.5	96.4	70.7	112.7	197.5	127.1	198.2	89.3	140.3	190.7	195.8	349.0
Venture and growth capital (growth rate)	%, Year-on-year growth rate	..	-34.65	-26.70	59.44	75.28	-35.62	55.93	-54.96	57.07	35.97	2.69	78.23
Leasing and hire purchases	PLN Billion	27.11	24.09	21.43	23.92	27.79	26.91	30.42	34.29	37.83	51.01	58.19	66.44
Factoring and invoice discounting	PLN Billion	30.34	45.51	53.16	88.61	95.33	113.06	129.59	152.68	171.64	192.74	222.49	269.63
Source: See Table 36.2.

SMEs in the national economy

The SME sector plays a major role in the Polish economy. With nearly 2.08 million non-financial enterprises, it accounts for 99.8% of all enterprises in Poland. The vast majority of them, 2 004 288, are microenterprises employing less than 10 people, while 53 763 are small enterprises (10-49 people employed) and 15 335 medium-sized enterprises (50-249 people employed). The total number of SMEs grew by 3.2% in 2016-17, mainly driven by a 3.5% growth in the micro-enterprise segment, while the number of small enterprises dropped by 6% and the number of medium enterprises did not change.

In 2017, Polish SMEs totalled 6.7 million employees – 68.3% of the enterprise-sector employment. Of this workforce, 3.99 million people were employed by micro-enterprises, 1.14 million people by small enterprises and 1.61 by medium-sized enterprises. SMEs account for 55.6% of the total business sector value added. In terms of investment outlays, SMEs are relatively conservative: they account for 43.2% of total outlays.

In the industry sector, small and medium-sized enterprises respectively comprise 15.8% and 48% of all enterprises that introduced innovations in their products and processes in 2015-17. In the services sector, the figures fall to 9.1% for small enterprises and stand at 31.6% for medium-sized enterprises. The share of revenues from sales of new or significantly improved products in total sales revenues amounted to 2% for small enterprises in the industry sector and 0.7% in services, and to 4.6% and 2% for medium-sized enterprises. Small enterprises’ expenditures on innovation activities in 2017 amounted to PLN 3.19 billion, while that of medium enterprises reached PLN 6.15 billion.

7.0% of small enterprises’ total revenues came from export sales in 2017. This figure reached 19.9% for medium enterprises.

SME lending

Total outstanding business lending has been following a constant upward trend since 2010, while outstanding loans to SMEs have increased every year since 2013. Outstanding SMEs business loans increased by less than 1% in 2018, while the compound annual growth rate (CAGR, the mean annual growth over the period) over 2010-2018 stood at 6.4%.

The SME sector currently accounts for 53.7% of total business loans, which makes it an important customer for corporate lending.

Credit conditions

In 2018, SME interest rates increased, although they remain low. Since their peak in 2008, they have decreased by 1.9 percentage points, from 5.4% in 2008 to 3.4% 2018. Interest rates for large enterprises followed a similar pattern and stood at 2.9% in 2018. Interest rate spread has reached 0.5 percentage points.

According to the survey conducted in January 2019 by the National Bank of Poland (NBP), some banks tightened their credit policy (mostly in the segment of SMEs loans) in the last quarter of 2018. This is due to their own current or expected capital position and the credit risk increase for companies in some industries (e.g. construction or car trade and rental). Above all, they reduced maximum loan amount, although other conditions have not been changed substantially.

Alternative sources of SME financing

The private equity market in Poland is still at an early stage of development, but according to Invest Europe (2019), all private equity investments in 2018 accounted for 0.2% of GDP. Venture capital investments in Poland accounted for 0.01% of GDP and growth investments accounted for 0.03% of GDP. Venture capital investments have still not fully recovered from their dramatic decline in 2009. In 2018, they amounted to roughly half of their 2008 peak value, and later stage venture investments, in particular, remained below pre-crisis levels. Pursuant to Invest Europe and as in prior years, Central and Eastern Europe private equity investments were concentrated in a few countries in 2018. Poland remained the leading destination with 32% of the region’s total investment value.

In 2007, NewConnect was launched in Poland as a stock exchange market, organised and operated by the Warsaw Stock Exchange (WSE). It provides financing for young companies (including SMEs) with a large growth potential. It is characterised by reduced formal requirements and a lower cost of entry and trading as compared to the main WSE market. In 2018, 387 companies have been listed on NewConnect. After a period of rapid growth in 2007-12, market development has slowed down in recent years. Potential reasons include a decrease in investor confidence and concerns about market liquidity.

The size of the leasing market in Poland has increased steadily since 2010, with a Compound Annual Growth Rate (CAGR, the mean annual growth over the period) of 13.8% in 2010-18. Leasing is a significant source of financing for SMEs in Poland (59% of SMEs declares their interest in future use of leasing). This is one of the highest results across the EU (according to the SAFE survey).

Over the last 8 years, Poland has witnessed rapid development of the factoring market. Its turnover exceeded PLN 269.6 billion in 2018, compared to PLN 88 billion in 2010, indicating a CAGR of 15% per annum.

Other indicators

The share of non-performing SME loans in 2018 dropped to 8.7% and has been constantly decreasing since 2012, when it stood at just over 13%. In 2018, it was much closer to pre-crisis levels.

Government policy response

Since 2013, the state-owned development bank Bank Gospodarstwa Krajowego (BGK) has run the governmental De Minimis Guarantee Scheme for SMEs. As of August 2019, this had resulted in almost PLN 63 billion in guarantees. Under the De Minimis Guarantee Scheme, SMEs may apply for guarantees covering up to 60% of the credit amount, and up to a maximum of PLN 3.5 million, at a cost of 0.5% per annum.

In addition to the De Minimis Guarantee Scheme, SMEs may also benefit from guarantees under the COSME scheme or Innovative Economy scheme funded by EU cohesion funds. Under the COSME scheme, SMEs can apply for guarantee covering up to 80% of the credit amount, up to a maximum of PLN 600 000, and at a cost of 1% per annum. Moreover, the Innovative Economy scheme was replaced in 2017 with the Smart Growth scheme, offering guarantees up to 80% of the credit amount, up to a maximum of EUR 2.5 million, free of charge for SMEs. It provides guarantees of PLN 2.22 billion, which secure bank loans worth PLN 2.78 billion.

In December 2013, the Ministry of Family, Labour and Social Policy in cooperation with Bank Gospodarstwa Krajowego (BGK, the Polish development bank), launched a pilot of the “Wsparcie w starcie” scheme in three voivodeships (Polish provinces), before extending it to the entire country in November 2014. Under this scheme, unemployed, recent graduates and final year students starting up a new business can apply for low-interest rate loans (equal to 25% of the National Bank of Poland’s rediscount rate) and up to a maximum amount of 20 times the national average salary.

Moreover, a new law has been adopted, which allows persons which have sole proprietorship and whose average monthly income does not exceed 2.5 times the minimum wage to pay reduced social insurance contributions, proportional to the income. In addition, relief for the start envisages that entrepreneurs that are starting off may be exempted from the obligation of paying social insurance contributions for the first 6 months of their economic activity.

The so-called SME package was introduced and its aim was to improve the liquidity of companies and to reduce the bureaucratic burden, by increasing the limit of a small taxpayer or the possibility of a one-off deduction of a tax loss of up to PLN 5 million.

Furthermore, Poland amended the binding law on combating late payment and adopted the new Public Procurement Law to improve the situation for SMEs.

In 2016, the then Ministry of Economic Development, in cooperation with the Polish Development Fund launched the Start in Poland initiative with a budget of PLN 2.8 billion, to accelerate equity funding of Polish start-ups. PLN 1.1 billion will be spent on firms in the incubation phase, PLN 35.0 million on those in the scale-up phase and PLN 1.8 billion on those in the growth phase.

Figure 36.1. Trends in SME and entrepreneurship finance in Poland

Source: see Table 36.2.

 StatLink https://doi.org/10.1787/888934117706

Table 36.2. Definitions and sources of indicators for Poland’s scoreboard
Indicator	Definition	Source
Debt
Outstanding business loans, SMEs	..	Polish Financial Supervision Authority (KNF)
Outstanding business loans, total	..	Polish Financial Supervision Authority (KNF)
Share of SME outstanding loans	..	Polish Financial Supervision Authority (KNF)
Outstanding short-term loans, SMEs	Outstanding loans (SME) with initial maturity less than 1 year, loans to residents only	Polish Financial Supervision Authority (KNF)
Outstanding long-term loans, SMEs	Outstanding loans (SME) with initial maturity more than 1 year, loans to residents only	Polish Financial Supervision Authority (KNF)
Share of short-term SME lending	..	Polish Financial Supervision Authority (KNF)
Government loan guarantees, SMEs	New goverment loan guarantees issued under De Minimis Guarantee Scheme	Bank Gospodarstwa Krajowego (BGK)
Government guaranteed loans, SMEs	New loans guaranteed under De Minimis Guarantee Scheme	Bank Gospodarstwa Krajowego (BGK)
Non-performing loans, total	..	Polish Financial Supervision Authority (KNF)
Non-performing loans, SMEs	..	Polish Financial Supervision Authority (KNF)
Interest rate, SMEs	Calculated as interest revenues divided by average level of outstanding business (SMEs) loans over the year	Polish Financial Supervision Authority (KNF)
Interest rate, large firms	Calculated as interest revenues divided by average level of outstanding business (large firms) loans over the year	Polish Financial Supervision Authority (KNF)
Interest rate spread		Polish Financial Supervision Authority (KNF)
Collateral, SMEs	SME loans requiring collateral / Total SME loans	The Polish Bank Association (ZBP)
Percentage of SME loan applications	SME loan applications / Total loan applications	The Polish Bank Association (ZBP)
Rejection rate	1 - Accepted SME loan applications / SME loan applications	The Polish Bank Association (ZBP)
Utilisation rate	Utilised SME loans/Accepted SME loan applications	The Polish Bank Association (ZBP)
Non-bank finance
Venture and growth capital	Total venture (seed, start-up, later stage venture) and growth investments	Invest Europe (via Polish Private Equity and Venture Capital Association PSIK)
Venture and growth capital (growth rate)	..	Invest Europe (via Polish Private Equity and Venture Capital Association PSIK)
Leasing and hire purchases	Total value of new leasing agreements	Statistics Poland (GUS)
Factoring and invoice discounting	Total factoring turnover	Statistics Poland (GUS)

References

GUS (2018) Działalność przedsiębiorstw niefinansowych w 2017 roku, available at: https://stat.gov.pl/download/gfx/portalinformacyjny/pl/defaultaktualnosci/5502/2/14/1/dzialalnosc_przedsiebiorstw_niefinansowych_2017.pdf

Invest Europe (2019), Annual Report 2018-19, available at: https://www.investeurope.eu/media/2585/invest-europe-2018-european-private-equity-activity.pdf

Invest Europe (2019), Central and Eastern Europe Statistics 2018, available at: https://www.investeurope.eu/media/2630/ie_cee_report_2018_final.pdf

Kowalczyk A., Walewski M. (2019), Efekty programu gwarancji de minimis 2018. Bank Gospodarstwa Krajowego, available at: https://www.bgk.pl/files/public/uploads/graphics/Raport_PLDVI_2018_public.pdf

Komisja Nadzoru Finansowego (2019), Sytuacja sektora bankowego w 2018 r., available at: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjJiInEu7LlAhUBxYsKHcB5D3YQFjAAegQIAxAC&url=https%3A%2F%2Fwww.knf.gov.pl%2Fknf%2Fpl%2Fkomponenty%2Fimg%2FRAPORT_O_SYTUACJI_BANKOW_2018_65694.pdf&usg=AOvVaw2UEoOLbA3FBReqEVgzhWt3

Ministry of Investment and Economic Developament (2018), Sprawozdanie z realizacji Programu Operacyjnego Inteligentny Rozwój za rok 2017, available at: https://www.poir.gov.pl/media/62510/sprawozdanie_roczne_poir_2017.zip

National Bank of Poland (2019), Sytuacja na rynku kredytowym. Wyniki ankiety do przewodniczących komitetów kredytowych. I kwartał 2019 r., available at: https://www.nbp.pl/systemfinansowy/rynek_kredytowy_2019_1.pdf

PARP (2018) Raport o stanie sektora MSP w Polsce 2018, available at: https://www.parp.gov.pl/storage/publications/pdf/raport_o_stanie_sektora_2018.pdf

Statistics Poland (2018), Działalność innowacyjna przedsiębiorstw w Polsce w latach 2014-2016, available at: https://stat.gov.pl/download/gfx/portalinformacyjny/pl/defaultaktualnosci/5496/2/15/1/dzialalnosc_innowacyjna_przedsiebiorstw_w_latach_2014-2016.pdf

Statistics Poland (2018), Wyniki finansowe podmiotów gospodarczych I-XII 2017, available at: https://stat.gov.pl/files/gfx/portalinformacyjny/pl/defaultaktualnosci/5502/11/18/1/wyniki_finansowe_podmiotow_gospodarczych_1-12_2017.pdf

Statistics Poland (2019), Działalność faktoringowa przedsiębiorstw finansowych w 2018 roku, available at: https://stat.gov.pl/download/gfx/portalinformacyjny/pl/defaultaktualnosci/5503/2/14/1/dzialalnosc_faktoringowa_przedsiebiorstw_finansowych_w_2018_r.pdf

Statistics Poland (2019), Działalność przedsiębiorstw leasingowych w 2018 roku, available at: https://stat.gov.pl/download/gfx/portalinformacyjny/pl/defaultaktualnosci/5503/3/12/1/dzialalnosc_przedsiebiorstw_leasingowych_w_2018.pdf