Refusals by banks to finance projects by cultural and creative businesses could reach 13.4 billion over the next seven years if nothing changes, says a survey released by the European Commission on 7 January.

Carried out by the consulting firm IDEA, the survey confirms the orientation that the Commission wishes to give to the EU's culture policy, in particular though the new financial guarantee facility.

This guarantee, foreseen under the new Creative Europe 2014-2020 programme, will not be up and running until 2016. It will target SMEs, covering part of the risk on loans offered by banks. At the time of the European Parliament's vote in mid-November 2013, French Conservative MEP Jean-Marie Cavada voiced doubts, however: "This will of course help audiovisual operators, but may be inappropriate for cultural businesses that primarily need cash that this fund will not guarantee".

The Creative Europe programme will provide more than 120 million to finance the guarantee, which according to the Commission's estimates is expected to yield more than 750 million in affordable loans. The bulk of the culture budget resources - 1.46 billion over seven years - will continue to be allocated to non-repayable grants.


For the Commission, it is urgent to give credibility to the cultural sector, which is growing at an above average rate and accounts for up to 4.4% of the Union's GDP. Even this growth, however, does not stop banks from refusing loans. According to the Commission, these refusals are due to numerous lenders' "insufficient experience in assessing the solvency of businesses with intangible assets such as intellectual property rights". Banks are also hampered by a lack of reliable statistical evidence on the sector. The survey nonetheless notes that, compared to the economy as a whole, "European cultural and creative businesses actually have a better-than-average profit margin and solvency ratio".

SMEs often do not dare to apply for loans or lack business and management skills. Of the 26% of respondents who did not look for external finance in the past three years, 39% said doing so was too complicated or time consuming.

The EU executive hopes to meet these challenges through support for projects to better inform both lenders and borrowers of the factors that should be taken into account when assessing the solvency of cultural SMEs. Such measures could include: the coordination and exchange of good practices between member...

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