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Evaluation support study on the EU rules on State aid for access to finance for SMEs

Completed Project


Firms and Markets

Project Management

Tomaso Duso

Project Period

April 1 - December 31, 2019

Commissioned by

European Commission, DG Competition

In Cooperation With

Sheppard Mullin

As part of the evaluation process of the current State aid rules, the European Commission has awarded to the consortium of Lear, DIW Berlin, and Sheppard Mullin, a specific contract to carry out a study of the EU rules for State aid facilitating access to finance for Small and Medium Enterprises (SMEs). These rules comprise the Guidelines on State aid to promote risk finance investments (RFG) and the relevant provisions of the General Block Exemption Regulation (GBER).

SMEs represent the backbone of the European economy, accounting for 67% of total employment in the EU-28 non-financial business sector and generating 57% of value added in the EU-28 non-financial business sector. Furthermore, SMEs represent one of the main drivers of economic growth: their ability to leverage their merits and scale up into bigger firms brings greater productivity and innovation into European markets. However, market failures risk impairing the ability of SMEs to grow and thrive. The screening process necessary for financial intermediaries to assess firms’ credit-worthiness is costly and may in some instances be too burdensome compared to the expected value of the investment; the same may apply to equity investors. The result is that, without government interventions, SMEs may be inefficiently underserved by business finance markets.

This market failure is one of the main reasons why Member States often intervene to facilitate the provision of credit and equity to SMEs. With the GBER, the Commission has identified conditions under which certain aid measures granted by Member States are exempted from the notification requirement. For those types of aid not covered by the GBER, the Commission has issued the Risk Finance Guidelines to provide guidance to Member States on how it will carry out a substantive compatibility assessment under Article 107 (3) TFEU (compatible aid) and how to design risk finance measures in such a way that the measures do not entail State aid under Article 107 (1) TFEU.

The objective of this Study is to evaluate the rules set out in the GBER and in the Risk Finance Guidelines to understand whether they are still relevant based on the evolution of the economic environment and whether they have been effective in remedying the market failure described above. The findings of the Study will inform the evaluation of the current rules and their possible future revision, to the extent possible of the applicable EU case law on the notion of aid under Article 107 (1) TFEU and on the conditions of exemption under Article 107 (3) TFEU.

DIW Team