Government offers support for smaller firms

Deiss wants to give smaller firms a helping hand Keystone

The Swiss government wants to improve basic business conditions for small and medium-sized companies (SMEs).

The economics minister, Joseph Deiss, said his department was willing to act as a point of contact for SMEs, which have been hit hard by the economic downturn.

The announcement comes after a new study showed that Switzerland’s major banks have been squeezing the credit lines for smaller businesses.

Many SMEs complain about the restrictive loans system and high interest rates offered by the major Swiss banks.

SMEs account for 99.7 per cent of the 300,000 registered businesses in Switzerland and they employ 75 per cent of all workers.

“Considering the importance of SMEs it is even more significant to come up with a common policy that is in favour of these companies,” Deiss said at a press conference in Bern on Friday.

“The economics ministry wants to act as a mediator or point of contact for SMEs,” he added.

In order to support existing companies and facilitate the launch of new businesses, Deiss called for tax incentives to encourage private investors.

The economics ministry added that the introduction of a new electronic administration system in the autumn would save SMEs on average 660 hours per year.

The ministry envisages using this electronic system for managing social security contributions and tax returns.

Credit squeeze

A recent study called on the government to take action after it was shown that Switzerland’s major banks were increasingly reluctant to issue loans to smaller firms.

The study, which was carried out on behalf of the cantonal banks and the Swiss government, found that loans by major banks had dropped by 29.7 per cent to SFr144.7 billion between 1997 and 2002.

“Company loans are at their lowest levels since the end of World War II,” said Maurice Pedergnana of the Institute for Financial Services (IFZ), which conducted the study.

However, the study also found that smaller banks were now dishing out more credit to SMEs, with an increase of 11.2 per cent. Loans by big banks dropped by 21 per cent over the same period.

Deiss explained that the bigger banks’ controversial lending policy was due to the introduction of stricter risk assessment, which had led to a rise in interest rates.

However, Pedergnana offered a different take on the situation.

“The fact that smaller banks are more willing to issue loans could be due to their improved risk management,” he said.

swissinfo with agencies