Few in leadership positions truly understand and advocate for the unique challenges that face SMEs. With large corporations having the resources to advocate their views and ensure they are not impacted by upcoming policies, SMEs do not have these resources, nor do they regularly have the time to be up to date on levels of governance above the local authorities that they are directly impacted by. Simply put, a build-up of SME resistance on policies that they are not alerted to by trade associations, or the like, is highly unlikely, as an SME will not notice until it has passed and has an irrevocable impact upon profitability.

The EU has gone to great lengths to cut down on the amount of red tape encountered by SMEs, and many have benefited in profitability from EU measures, such as COSME.

Within the EU, spurred by economic turmoil over recent years as well as international trade discussions, those efforts to streamline or make existing financial mechanisms effective have taken centre stage. Under the still relatively new European Commission, led by Jean-Claude Juncker, the establishment of a capital markets union is a priority. This appears at first to be primarily a bureaucratic manoeuvre with little in the form of concrete policy or a clear understanding of what a capital markets union in Europe would mean.

But underlying this political rhetoric, a capital markets union designed under pure intentions could potentially make billions available for capital investments focused on business and infrastructure, providing a potential way in order to reduce unemployment as well as spur further economic development. It could also, in an ideal form, reduce the costs associated with SMEs raising capital or the associated costs of individuals in establishing ISAs, mutual funds or pensions.

Yet this could also be done so as to preserve large corporations, which have resources to make their voices heard, whilst potentially having a negative impact upon SMEs that number 20 million in the EU or 99% of businesses registered.

On this topic Georg Fahrenschon, head of the German Savings Banks Association, is arguing that if the capital markets union is seen as a way to reduce the role of bank lending, that the capital market plan will decimate small businesses in Europe, as the bank lending in order to fund regional companies will be cut. Unlike other areas of the work, European companies receive upwards of 80% of their external funding from bank loans. This could potentially cause a situation akin to the 2 years immediately following the global financial crisis, when SMEs were unable to access necessary funding due to banks having retrenched.

While this would encourage other forms of funding, not originating with banks, it would devastate traditional banking. Traditional banking, while possessing many potential flaws, undeniably is well practised, with local relations built over time, so as to better serve local SMEs with this increased level of understanding.

While SMEs form the backbone of the European economy, many of the strategies currently under consideration are far too expensive for SMEs to implement. Though currently included in the range of measures under consideration to break down barriers for cross-border investments, the encouragement of corporate bonds will not work for all SMEs. When considering the unique needs as well as limitations of small and medium enterprises, one becomes concerned about the ability of EU SMEs to thrive in the currently proposed measures, unless a more regionally oriented supplier of credit forms is created to bolster the plans.

The EU Commission did state in February of 2015 that it understands the particular challenges that SMEs will face under the plans and that they will ensure the promotion of private placements for securities across borders in order to boost potential investments into SMEs.

Yet, there appears to be a bit of a leap in assuming that such a structure will come to pass with a yield of capital that would ensure not only that current SMEs have access to finances but that future SMEs are also able to access needed finances.

Going forward in discussions, further consultations as well as the drafting of plans for the creation of a capital markets union within the European Union, we must not forget that as there are 20 million SMEs in Europe, with an estimated 9 out of 10 of those qualifying as micro firms, we must do all in our power to ensure that the unique concerns and needs of Europe’s economic backbone for the purpose of satisfying large globalised corporations.