Effectiveness of SME Support Programmes – SBA Microloan Programme


Support measures for entrepreneurs represent an important economic instrument contributing to the stabilisation and further development of the SME sector. More than EUR 3 billion has been used to support SME entrepreneurship in Slovakia in the previous 5 years. In 2019, the total support for SMEs was close to EUR 700 million. The highest share of total support was accounted for by credits, loans (41%) and subsidies, NFAs and grants with a share of 40% of total support. In a year-on-year comparison, the real uptake of support for SMEs was around 12% higher than in 2018.  

EU countries also recognise the importance of SMEs and use a wide range of support measures to support them. According to the results of several surveys, Slovakia is lagging behind in the use of support programmes for SMEs compared to other EU countries, but also to the V4 countries. These findings point to the fact that Slovakia still has considerable potential for greater use of support programmes in the SME sector.

The lower use of support programmes for SMEs in Slovakia is related to the level of awareness of the possibilities of their use. According to the results of a quantitative survey carried out in January–February 2020, more than half of entrepreneurs in Slovakia feel the lack of information about the possibilities of using support programmes for small and medium-sized entrepreneurs.

Almost a quarter of respondents assess positively the possibilities for SMEs to use the support tools provided by the public sector for their business. On the other hand, more than half of SMEs perceive the possibilities of using public support rather negatively. Almost two thirds of SMEs consider high administrative complexity as the most important barrier to access to public support for entrepreneurs. More than one third of the representatives of small and medium-sized enterprises perceive the difficult fulfilment of support conditions or long procedures for evaluating applicants as an obstacle.

According to the survey results, one in ten SMEs had benefited from some kind of public support in the previous 12 months, with overall satisfaction with the support provided prevailing among the supported entrepreneurs. More than half of the SMEs rated the project/activity for which they received public support as sustainable.

The administrative complexity of processing an application for public support is the most common reason for lack of interest in public support for entrepreneurship. Other reasons cited by entrepreneurs included complications in meeting the conditions for obtaining support, or lack of confidence in the quality and availability of the service. Nevertheless, more than half of small and medium-sized entrepreneurs in Slovakia plan to use public support for the development of their business activities in the future.

An evaluation of the impacts and effects of the SBA’s Microloan Programme (2013–2017) confirmed positive economic impacts on the SMEs supported. In order to identify underlying trends in the evaluated groups and to assess pre-intervention trends with a post-intervention period between supported and non-participating firms, the analysis evaluated data on sales, value added and employment. Over the 2013 to 2017 period under review (t-1 to t+3), the group of supported firms showed higher growth in average sales (up 25%) and value added (up 43%) than the counterfactual group of non-participants (up 18% and 39%, respectively). At the same time, the group of entities with the provided intervention recorded higher growth dynamics of average personal costs (up 48%) than the group without the intervention (growth of 30%), which may indicate a positive impact of the received support on employment growth.

The results of the counterfactual assessment further confirmed the positive impacts of the aggregate estimates of impacts on revenue and value added. Aggregate estimates of the revenue impacts on the Microloan Programme 2013–2017 supported entities range from EUR 33,877 to EUR 36,363 per business entity. Aggregate estimates of value-added impacts are also positive, ranging from EUR 5,808 to EUR 7,143, within the applied stratification criteria. The cost of generating an additional euro of added value ranged from EUR 4.7 to EUR 5.7.

An analysis of the effectiveness of the SBA’s Microloan Programme was conducted on beneficiaries who took out loans between 2013 and 2017. The year (cohort) 2013 represented the first year of the launch of the SBA’s new Microloan Programme. This cohort was the only one to perform negatively in the evaluation and had a dampening effect on the overall positive results of the evaluation of the Microloan Programme. For this reason, the evaluation of the effectiveness of the Microloan Programme was also carried out in a variant in which the 2013 cohort was excluded. Aggregate estimates of the impacts of the measure under consideration for the 2014–2017 cohorts on sales are positive and range from EUR 62,149 to EUR 65,915 per business entity. Aggregate estimates of value-added impacts are also positive, ranging from EUR 10,498 to EUR 11,169, within the applied stratification criteria. The cost of generating an additional euro of added value ranged from EUR 2.8 to EUR 3.0.

Based on the results of the evaluation of the Microloan Programme, the improved performance of SMEs as a result of the intervention obtained can be stated which clearly demonstrates the validity of the intervention under consideration during the period under review. In order to improve the conditions for the use of support programmes, it is a prerequisite not only to increase the quantity and budgetary capacity of support programmes, but also to increase their effectiveness and accessibility for individual target groups. As the SME business support system in Slovakia is quite complex and largely opaque for entrepreneurs, it is necessary to strengthen the awareness of small and medium-sized enterprises at the regional and local level. 97% of business entities in Slovakia are micro-enterprises, but up to two thirds of these entrepreneurs feel a lack of information about the possibilities of using support programmes. As an example of appropriate measures in this area, it is possible to mention the national projects of the SBA National Business Centres, which aim to provide entrepreneurs with a comprehensive range of services, including information support on support measures in the Slovak Republic.