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The role of mutual guarantee systems in the financing of SMEs in the European Community. Communication from the Commission. SEC (91) 1550 final, 5 September 1991

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COMMISSION OF THE EUROPEAN COMMUNITIES SEC(91) 1550 final Brusse Is, 5 September 1991 COMMUNICATION FROM THE COMMISSION THE ROLE OF MUTUAL GUARANTEE SYSTEMS IN THE FINANCING OP SHEs IN THE EUROPEAN COMMUNITY - 2 - SUMMARY This Communication focuses attention on the continuing problems encountered by SME's throughout the Community in obtaining ready access to sufficient funding at reasonable cost and highlights Mutual Guarantee Schemes (MGS) as one form of action which should be encouraged as an effective means to improve the situation. The main function of MGS is to enable SME's, by means of common action, to provide acceptable levels of collateral to banks. It is recognised that up to date the record in member states where this type of scheme already exists has been patchy and it is for this reason that the proposed actions on the part of the Commission concentrate on providing technical assistance and advice with a view to assisting MGS to cooperate more effectively at Community level and to identify and adopt the most appropriate management practices aimed at achieving maximum effectiveness. The principal measures proposed are assistance in the establishment of a European Mutual Guarantee Association; institution of a pilot scheme to stimulate the creation of MGS in those Member States where they as yet do not exist. promotion of seminars and conferences to disseminate information concerning the objectives, funding and operation of MGS; create pilot schemes to identify the most effective means to improve the funding and management of MGS. CONCLUSION The completion of the internal market and developments in Central and Eastern Europe mean that competition for scarce financial resources will become even more fierce. Despite many initiatives in all Member States and at Community level, representations from SMEs and independent research points to the continuing problems experienced by SMEs in obtaining access to finance and

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