The SME financing through private debt #4 : Publication of the report of the observatory of the financing of companies, on the financing of SMEs-VSEs

On December 19, 2019, the report of the Observatory of Business Financing was published on the subject of SME-ETI financing. This report, the fruit of the work of the members of the observatory, public and private financing professionals in France, under the aegis of the Credit Ombudsman, is a mine of statistical information on the subject of the ability of French SMEs to finance themselves and contains precise recommendations to provide solutions to the difficulties identified.

Leaders of small and medium-sized businesses are facing strategic challenges today major. Whether it's digital transformation, innovation or to a more environmentally conscious economy, their changing needs. At the same time, financing solutions have become more and more important. diversified. This new situation should also lead the company director to to get the most out of your new financing environment. It is essential that these the company can be financed, which also raises the question of whether the right balance between self-financing, debt and equity. The entrepreneur must have the right keys to understanding and easy access to the information and relevant training, if it wants to promote the success of its extract from the report's summary.


Generally speaking, the debt ratio of SMEs is trending upwards and downwards. The increase in the value of the company's equity capital is due in particular to the significant strengthening of its equity capital, which has been which is great news. The rate of growth in SMEs are mainly self-financed, unlike large companies, which are not. companies and ETIs, which often rely on external capital to increase their equity capital (only 27% comes from external capital for SMEs/ETIs).

With regard to the sources of debt, it comes, without change, from a very large majority of bank loans: the sources have changed very little for the past 15 years, unlike large companies and TWAs, for which the Disintermediation through market-based approaches continued. In 2017, 85% of financial debts of SMEs come from bank credits and this proportion was the same in 2005. The rate of access to bank credit is considered satisfactory, except for the financing of intangibles, traditionally not covered by banks.

It is welcome that the report notes the emergence of private placement in the financing landscape :

Debt products (such as loan funds or private placement) make up a significant portion of the total debt. now part of the corporate finance landscape (...) hundreds of fintechs have also emerged in a sustainable way (...) These fintechs (...) aim at facilitate the financing of VSE SMEs in almost all its dimensions possible. In the past, there was a divide between traditional and new actors in the field. finance and fintechs, the sector has matured and many traditional players have them now integrated into their strategy ... These new possibilities, still few used by SMEs/VSEs are therefore now part of the financing mix made available to them".

We are pleased that private debt financing is identified as a credible and efficient alternative to bank financing, and to be identified as "facilitators" of SME financing.

It is also stated that these alternative forms of financing are still too much of a burden for the public sector. often reserved for large TWAs and SMEs, which we deplore and which are often let's work to correct it.

As indicated in the report, the purpose of a platform like FirmFunding is to well to democratize access to alternative forms of financing, and, among them, private debt:

The minimum amounts, targeted by financial actors, so that companies can mobilize these tools generally remain high, which is why they concern large TWAs and SMEs. However, some actors, including of fintechs, are striving to democratize them.

More prospectively, the report questions the expectation of a lesser capacity of the traditional banking system to finance companies in the future due to the fact that the increased prudential constraints: this private debt market could thus become and debt funds could be pressured to "relax" their debt and criteria so as to extend their capabilities to SMEs.

Last but not least, the report makes a clear observation (which is in line with the one we had also noted in our Viavoice survey on the financing of companies, which you can find here) of the ignorance of SME leaders - TPEs in terms of financing, responsible for some of their difficulties in this area. domain :

One difficulty regularly recurs in the exchanges: the level of competence of the participants. a significant portion of the leaders of small and medium sized companies companies is not enough (...) One way to bring these skills is to provide them to the company. d'to accompany the leaders in their steps, both at the time of creation that afterwards".

The report's recommendations therefore focus exclusively on conducting training and education campaigns for business leaders, in order to help them to help structure, identify and find suitable financing solutions.

Together, let's democratize access to private debt financing to benefit of SMEs: Let's finance growth differently! Let's mobilize for :

  • that financing professionals, who are still overly concentrated their offerings for large companies and TWAs, deploy alternative solutions to bank credit by funding,
  • financial education for business leaders to help them to allow a global apprehension of all the possible solutions of funding to find the most suitable ones for the development of their growth.

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