Because there are only three serious banks in the Netherlands, there is little competition among them. This also adds up to high rates and poor conditions for the SME entrepreneur. Due to the lack of competition, banks reject many loan applications. In fact, it is so bad that an article recently appeared in Het Financieele Dagblad with the headline: 'Dutch SME discontinues search for financing'. The big question now is: where is the solution if the major banks no longer help the SME entrepreneur?
Stupid move?
There have been calls from The Hague for some time for the establishment of an SME State Bank. A government-funded and controlled bank to provide credit to SMEs. In our view, this is a stupid move. If the big banks find it expensive and too risky to service SMEs, why should a taxpayer-funded state bank be able to do so? Besides, this is unfair competition against the other SME finance providers. Reference is often made to the British Business Bank. But that is not a real bank, it is a platform. A kind of intermediary set up by the government. Outgoing minister Adriaansens has already ordered that a similar financing hub be set up in the Netherlands.
Guarantee and incentive
In our view, the solution lies much more in the area of state guarantees. We already have state-guaranteed BMKB loans on a limited scale. This could be further expanded and its distribution should also be through other channels such as crowdfunders, direct lenders and asset-based financiers. Another line of thinking goes more towards tax incentives. In Belgium, for instance, there are Win-Win Loans where the (private) lender enjoys a tax advantage when providing loans up to €300,000. These loans are also leveraged because they are considered liable equity. As a result, other, professional financiers will be more willing to provide credit as well. Given the large number of wealthy individuals in the Netherlands, this idea is very promising.
Responsibility of financial advisers
Finally, a big responsibility lies with financial advisers to show SME entrepreneurs the way in the forest of alternative financing options. Providers abound; however, finding the right one requires a lot of knowledge and experience.
