Small companies create 85% of new jobs

85% of net new jobs (new jobs created minus jobs lost in a given period) in the EU between 2002 and 2010 were created by small and medium sized enterprises (SMEs). This figure is considerably higher than the 67%-share of SMEs in total employment. During this period, net employment in the EU’s business economy rose substantially, by an average of 1.1 million new jobs each year.

These are the main results of a study on the essential contribution of SMEs on job creation presented by the European Commission last month.
With 1% annually, the employment growth for SMEs was higher than for large enterprises with 0.5%. A clear exception is the trade sector, in which employment in SMEs increased by 0.7% annually, compared to 2.2% in large enterprises. This is due to the strong increase of large trade enterprises, in particular in sales, maintenance and repair of motor vehicles.

Within the SME size-class, micro firms (less than 10 employees) are responsible with 58% for the highest proportion of total net employment growth in the business economy.

Commission Vice-President Antonio Tajani, responsible for Entrepreneurship and Industry valorised the relevance of SMEs for European economy, recognising the need to support them at all levels, since they represent a clear key for restoring economic growth.
More information can be found on the webpage of the SME Performance Review.

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Government lending to small firms shrinks dramatically

A new report pointing to how the government’s small business lending scheme has declined by 40% in the last year underlines the problems being faced by the UK’s smaller business owners.

Carried out by  financial services company Syscap, the study found that the government made £433m available under the Enterprise Finance Guarantee (EFG) scheme over the 12 months to July 2011 compared to the £742m made available under the auspices of the scheme – which guarantees 75% of the value of a loan to businesses turning over £25m or less.

The researchers also discovered that from April to June 2011, only £93.1m was offered to small firms – little more than a third of the figure reached in the second quarter of 2009.

Syscap chief executive Philip White believes the scheme should be extended to include lease-based finance arrangements, which are not currently covered by its terms.

White added: “With economic performance in the past two quarters looking lacklustre and the ongoing eurozone crisis continuing to erode business confidence, an expansion of lending under the EFG scheme is urgently needed to help put the economy and job-creation firmly back on the growth track.”

The Syscap survey further underscores Wanobe’s call for the creation of a National Small Business Owners Day to celebrate the real heroes of the marketplace, Britain’s hard working small and mid sized business owners.