Small Business Act from the EU

The European Union (EU) has finally woken up to the power of the small business, after publishing its long-awaited review of the Small Business Act (SBA) on the 23 February.

Nearly three years in the making, the SBA was proposed by the European Commission in 2008 and adopted by the Council later that year. It was intended to cut red tape, harmonise business taxes and make it easier for small businesses to access vital finance, across the EU. It was also intended as a response to emerging Asian economies, as it was considered that small businesses in Europe would suffer from cheap competition.

Small businesses have been badly hit by the recession, and their survival is seen a vital to economic recovery in the EU, as it is thought that small and medium-sized companies or SMEs (those with less than 250 employees) make up ninety-nine percent of all EU businesses and account for 70% of jobs and gross domestic product (GDP).

The SBA had 10 principles at its core, including better access to money, changes to bankruptcy legislation so that businessmen and businesswomen have a second opportunity, and improving business skills. The European Commission has made nearly 30 recommendations to sharpen the focus of the act, including a reduction in the time and money needed to start a business to a 3 days and 100 Euros maximum respectively. SMEs will get better access to contracts with Governments and there will be improvements to existing loan guarantee schemes.

The review of the SBA had been scheduled for December but was repeatedly postponed due to politicking. EU Commissioner Antonio Tajani said that the whole process was intended to simplify matters for small businesses.