Strengthening SME competitiveness through financial support

Abstract

Serbian SMEs after 2000 experienced high growth rate and become an important economic subject. During the economic crisis SMEs faced with severe problems. With economic recovery from 2015 on SMEs again have positive business demography. If look in SME`s business performances one cannot be satisfied. SMEs have experienced low level of profitability and competitiveness. Low efficiency, namely low gross value added, GVA made no room for savings and investments into development. The share of gross savings and investments into gross domestic product, GDP has for long time been less than 1/5. Thanking to high and increasing foreign direct investments total investments are on the level that made room for increase in rate of growth. The average rate of growth, 2-3% p.y. is insufficient to catch up other transitory economies. External sources of financing SMEs are limited and the discrepancy between demand for financial sources and supply is more than one billion euros. The difficult access to finance by SMEs can be explained by biased approach of banks toward large companies, problem of bank`s non - performing loans, high interest rates and high requirements of banks. The paper examines low efficiency of SMEs, especially problem of access to finance and try to recommend measures to overcome them.

Keywords

• transition
• sme
• entrepreneurship