The planned Small Business Act is a “crucial milestone”, commission president José Manuel Barroso said. It will mean “less red tape and more red carpet” for entrepreneurs.
The EU is home to some 23m small and mid-sized businesses (defined as companies with under 250 employees). They provide the majority of jobs in the EU, especially in key industries like textiles, construction and furniture-making, and are considered crucial to economic success.
But these firms often encounter huge administrative hurdles and difficulties securing financing. Entrepreneurship in Europe is also hampered by a lack of understanding of the importance of small businesses.
The plan is a part of the EU's Growth&Jobs Strategy and among other calls for policies to make starting and running a business easier and more appealing. These latter include limiting the time needed to start a new company to no more than a week. Obtaining licenses and permits should not take more than a month. The EU already committed to reducing the administrative burden for small firms by 25% by 2012. Proposed plan is intended to stimulate interest in entrepreneurship too, especially among young people.
Businesses will also have easier access to financing and be given a second chance if they fail. In line with this, the European Investment Bank plans to diversify the range of its instruments to support small firms.
The commission also proposes a new form of European company, to help small firms move beyond national borders. This new "European private company" rules would create a common start-up procedure throughout the EU and make it easier for companies to set up subsidiaries in other EU countries. Although small firms account for more than 99% of companies in the EU (and 70% of jobs), they remain mostly within national borders, unlike large companies.
Other proposals would increase access to government support, e.g. for training and research and development, and ensure smaller companies are paid promptly. Countries would also have the option of reducing VAT rates for services supplied by local business.
Author: European Commission
