Annex B. Effective approaches for implementing the G20/OECD High-level Principles on SME financing

Principle 1. Identify SME financing needs and gaps and improve the evidence base
Assessing the extent to which SMEs’ financing needs are met and where gaps exist.	- Collecting quantitative data on SME finance through reporting to, and surveys conducted by, public bodies (central bank, statistics office, etc.). - Collecting data on funds received by SMEs from private equity and venture capital firms, or business angels, through the relevant business associations. - Partnership between public bodies (central bank, ministry of finance and/or statistics office) and private equity, venture capital or angel capital business associations, to conduct surveys on the state of SME financing in these segments. - Gathering comparative evidence from other countries and regions through the OECD Scoreboard on Financing SMEs and Entrepreneurs.
Cooperating with relevant stakeholders, including central banks and financial supervisory authorities, financial and research institutions and SME representatives.	- Involving relevant stakeholders in the assessment of SME financing gaps through an institutionalised SME committee or panel, or through ad hoc consultations.
Cooperating at the national and international levels to increase transparency regarding definitions and improve the comparability of data and indicators, facilitate international benchmarking, and regulatory coordination, and shed light on outstanding financing gaps and issues.	- Gathering comparative evidence from other countries and regions through the OECD Scoreboard on Financing SMEs and Entrepreneurs. - Publishing the government assessment of SME financing needs and trends online.
Principle 2. Strengthen SME access to traditional bank financing.
Improving banks’ capacity to lend to SMEs, including through credit guarantees, securitisation, credit insurance and adequate provisioning for loan losses.	- Providing government guarantees to SME loans, with specific programmes targeting priority segments (women entrepreneurs, young entrepreneurs, start-ups, etc.). - Supporting the securitisation of SME loans, including by creating an enabling and conducive legal and regulatory framework or by putting in place a register increasing the availability and transparency of information. - Making the credit approval process more transparent to SMEs, for instance by providing them with a standardised credit report and with their credit rating, based on a standardised methodology. - Digitising the registration of security interests; digital registers can also be an effective way of publicising the existence of security rights on assets to creditors, purchasers and the general public.
Putting in place effective and predictable insolvency regimes ensuring creditor rights while supporting healthy companies and offering a second chance for honest entrepreneurs.	- Making insolvency procedures simpler and quicker for SMEs, including by digitising the process (through an online register allowing online submission of forms and real-time consultations by the parties along the process) or by establishing clear timelines for the various steps of insolvency proceedings. - Enhancing insolvency competencies in courts through specialised courts, judges or the provision of specific training to judges.

Principle 3. Enable SMEs to access diverse non-traditional financing instruments and channels
Increasing entrepreneurs’ awareness of the available financing options through targeted outreach initiatives.	- Increasing awareness of SME owners and managers of all available financing options through a combination of online platforms, information programmes and seminars, delivered in various locations across the country. - Matching SMEs with funds or investors through an online platform or through dedicated events. - Improving the investor-readiness of start-ups and SMEs through accelerators or incubators providing them with training as well as mentoring, coaching and networking opportunities. - Putting in place a referral regime whereby SMEs rejected for credit by the largest banks must be offered a referral to a designated, online finance platform.
Principle 4 - Promote financial inclusion for SMEs and ease access to formal financial services, including for informal firms
Maximising the number of SMEs which have access to and use mainstream financial services and products at a reasonable cost.	- Including relevant breakdowns (by gender, by location, etc.) in the collection of data on SMEs which do not have access to mainstream financial services and products, so as to design evidence-based policies targeting priority segments. - Developing specific programmes for priority segments, based on a thorough assessment of the specific challenges and obstacles they face.
Principle 5. Design regulation that supports a range of financing instruments for SMEs, while ensuring financial stability and investor protection
Ensuring that regulation is designed and implemented that facilitates SMEs’ access to a broad range of financing instruments.	- Considering the potential impact of relevant new laws and regulations on SME access to finance. - Reviewing relevant existing laws and regulation to assess their impact on SME access to finance. - Consulting the private sector and all relevant stakeholders when assessing the impact of existing or contemplated regulation on SME access to finance, through a public consultation, an ad hoc and dedicated working group, or through the consultation of an institutionalised consultative body like an SME council or an SME committee.
Putting in place legal, tax and regulatory frameworks contributing to foster diverse sources of finance	- Examining tax policies to ensure that they contribute to fostering diverse sources of finance by businesses.
Principle 6. Improve transparency in SME finance markets
Putting in place information infrastructures for credit risk assessment supporting and, to the extent possible and appropriate, standardising credit risk information and making it accessible to relevant market participants.	- Digitising the business registry to make it more accessible, and also to improve the quality and comprehensiveness of the information provided, including by enabling the uploading of documents like financial statements for free. - Putting in place a public credit registry or supporting the development of private credit bureaus. - Improving SME accounting practices through workshops raising awareness, trainings or the publication of guidelines, including online options. - Raising awareness about IFRS for SMEs, and the benefits they can bring in terms of access to finance.
Principle 7. Enhance SME financial skills and strategic vision
Championing SMEs’ enhanced financial literacy; their awareness and understanding of the broad range of available financial instruments.	- Engaging with the private and not-for-profit sector to cooperate and coordinate awareness and educational activities. - Developing educational activities facilitating SME access to diverse and alternative financing instruments. - Providing guidance and mentoring on financial issues from established entrepreneurs to less experienced ones.
Tailoring programmes to the needs and financial literacy levels of different constituencies and target groups.	- Tailoring each training programme to the needs and knowledge level of the SME owners and managers involved, based on a diagnosis made at the beginning of the programme.

Principle 8. Adopt principles of risk sharing for publicly supported SME finance instruments
Promoting SME financing, directly and indirectly.	- Accompanying the direct or indirect provision of funding by the public financial institution with measures addressing demand-side challenges and obstacles, for example by providing SMEs with the knowledge and skills needed to apply for the most suitable financing instrument in a successful and sustainable manner. - Conducting regular evaluations of the contribution of PFI programmes to improving and diversifying SME access to finance. - Publishing evaluations of the activity of the public financial institution, online for instance.
Principle 9. Encourage timely payments in commercial transactions and public procurement
Encouraging timely payments in Business to Business (B2B) and Government to Business (G2B) transactions and ensuring that SMEs are offered clear and appropriate payment terms.	- Tracking delays in payments by public bodies, consolidating related data, and potentially also publishing (online) or sharing them with the Parliament. - Putting in place mechanisms enabling SMEs to report late payments by public bodies. - Establishing an Observatory of payment delays to examine the conditions of payments between enterprises. - Creating a Mediator or Commissioner competent on all questions related to payment delays, whether the client is public or private. - Setting up project bank accounts to ensure public bodies prompt payments to suppliers working on a project.
Principle 10 - Design public programmes for SME finance which ensure additionality, cost effectiveness and user-friendliness
Ensuring financial and economic additionality.	- Defining a clear methodology to assess the additionality of contemplated measures to increase SME access to finance, and putting in place procedures to make sure that this assessment is done in a systematic manner. - Requiring evidence of additionality, in the form of refusals from financial institutions for instance. - Raising SME awareness of public programmes for SME finance for which they may be eligible through dedicated websites coupled with awareness campaigns in various locations, and partnering with business associations or local authorities to increase outreach.
Principle 11. Monitor and evaluate public programmes to enhance SME finance
Performing ex ante and ex post evaluations regularly based on clearly defined, rigorous and measurable policy objectives and impacts and in co-operation with financial institutions, SME representatives and other stakeholders.	- Setting clear objectives for public programmes in SME finance, and defining performance indicators capturing these objectives, preferably including quantitative indicators, to be assessed against baselines set at the beginning of the programme, both along the programme (continuous/regular monitoring), and at its completion (ex post evaluation). - Conducting systematic evaluations of public programmes, based on explicit and clear methodologies. - Engaging all relevant stakeholders (including beneficiaries and partner financial institutions, etc.) in the evaluation process, for instance through surveys, interviews, focus groups, or a combination of these.
Making sure that evaluation findings feed back into the process of policy making.	- Sharing evaluations with the Parliament, and discussing them during dedicated sessions of the relevant parliamentary group. - Making the continuation of the programme, or the provision of new funding, conditional to the submission of an evaluation report showing that it has been successful, including by linking the budget process and the evaluation process. - Putting in place clear procedures ensuring that the findings of evaluations are taken into account when designing new programmes. - Publishing evaluations and raising public awareness on their availability.

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