The European Court of Auditor’s (ECA) has published the results of its audit on the effectiveness of the Small and Medium Enterprise Guarantee facility, in terms of the effectiveness of its design and planning. Among the conclusions the ECA found that the framework for the management of the daily operations was considered appropriate, but no scoring standards and no minimum requirements were set for the selection of financial intermediaries.

The access to finance is a problem for SMEs in Europe, according to the Observatory of European SMEs. The SME Guarantee (SMEG) facility is a financial instrument managed by the European Investment Fund on behalf of the European Commission and provides guarantees or counter guarantees to financial intermediaries for loans granted by financial institutions to SMEs aimed at increasing the supply of debt financing.

With regard to the report published by the ECA, among the findings, ECA found that the objectives of the current SMEG facility were more precise than under the previous programmes in terms of expected outputs. Reporting requirements were satisfactory while being limited to monitoring output rather than results and impacts of the measure. ECA also concluded that at least a third of the loans were granted to SMEs that could have obtained the required financing without public support and only 12% were given to SMEs for innovative investments. Moreover, the EU added value of the facility was not clearly demonstrated.

Based in these conclusions, the ECA has proposed some recommendations, such as that, in the future, the Commission should set more specific quantifiable targets in order to facilitate monitoring of the achievement of the objectives of the financial instrument. In addition, a scoring system should be put in place to make the applications comparable. Appropriate measures should be taken to make sure that EU funds can be allocated more effectively to those SMEs with viable projects that would otherwise not have had been financed.