National Funding of the SME’s Business Development in Romania
Alina Gabriela Brezoi
Faculty of Economic Sciences, Petroleum-Gas University of Ploieşti, Bd. Bucureşti 39, 100680, Ploieşti, Romania
PhD Student at Valahia University of Targoviste, Bd. Carol I, no.2, Dambovita, Romania e-mail:[email protected]
Abstract
The main objective of this research is to make an analysis on the national funding sources of the eligible SMEs and to emphasize that this kind of funds for SMEs has to be a strategic priority for Romania. The programs for stimulating the establishment and development of small and medium enterprises which are meant to increase the competitiveness and effectiveness in terms of the competitive environment and specific phenomena of the market economy are managed, implemented, monitored and implemented directly by the Minister of Economy, Commerce and Relations with the Business Environment through its Directorate General for Entrepreneurial Policy. The method used to achieve this article is the document analysis method, especially research reports published by various national bodies, thus trying to draw a pertinent analysis of the contents approached theme.
Keywords: national funds for SMEs; regional development; newly created jobs JEL Classification: F36; O11; R11
Introduction
The programs funded by nonrefundable national funding have the main objective of creating and maintain new jobs for the national economy, the insertion of the unemployed and of the graduates in the work field, increasing the number of newly founded SMEs, raising the level of technology with new, innovative equipment, increasing the number of SMEs in the rural area.
The absorption of structural funds, which aimed to "Convergence" objective, had a positive influence; growth was recorded in most regions of Romania and is approaching the EU average.
(Scutariu, 2014, pp. 65 - 73)
The rise of the importance granted to the SMEs sector, as a direct consequence of the acknowledgment of its role in the European economy, and from its contribution to the rise of competition and of the sustainable development of the E.U., has led to creating a comprehensive framework of the politics in the SMEs, both at the E.U. and the other member countries' level, represented by adopting the Small Business Act for Europe (SBA) in June 2008.
According to the Government Strategy for the Development of SMEs and Improving the Business Environment in Romania-Horizon 2020, national entrepreneurial ecosystem will be enhanced based on the structure of domestic sector of SMEs, more active economically and
more competitive than they currently are, able to contribute massively to the economic sustainable development of Romania in the period of 2014-2020, and thus, to the social progress and prosperity of all citizens. Among the action directions of this strategy we can enumerate SMEs access to adequate funding. (Government Strategy for the Development of SMEs and Improving the Business Environment in Romania-Horizon 2020, the Department for Small and Medium Business, Ministry of Business and Tourism, 2014).
In this article I approach the problem of applying to nonrefundable funds granted by the Romanian Government in order to help the entrepreneurs from all the economy's sectors. In order for a company to survive, it must take into consideration the adjustment to the actual economic environment. The concept of sustainable development has a dynamic character triggering multiple dimensions closely connected to the local / regional / national context, with the needs and priorities manifested in the social, ecological and economic aspects of SMEs field of activity. (Caracotă, D., Caracotă, C.D, 2004).
The nonrefundable funds are a real help for both the young entrepreneurs who want to put in practice their ideas, as well for the companies which need certain amounts of money in order to modernize their business, money which they don't have to pay back.
Research Methodology
One of my research aims is making a diagnosis on the current stage of using the national grants on two of the well-known programs implemented directly by the Minister of Economy, Commerce and Relations with the Business Environment through its Directorate General for Entrepreneurial Policy in 2015.
Objective 1: to evaluate the functioning of the two selected assistance national programs for the SME’s sector in Romania which can serve to a better communication between the beneficiaries of these programs with all stakeholders.
Objective 2: providing access to information to all potential beneficiaries of national grants, thus achieving an improvement in the flow of information on accessing grants between the beneficiaries and The Territorial Office for SME's and Cooperatives.
The methodology was based on analysis and interpretation of statistical data processing, categorizing SMEs being made according to the European definition of SMEs given in Recommendation 2003/361 / EC and transposed into national law. This paper contains data related to Romanian SMEs processed from the annual reports of the Romanian Agency for SMEs (www.aippimm.ro).
Representative Aspects Regarding the Accesing of Start and Srl-D Programs by SMEs in Romania between 2009-2015
Accessing the nonrefundable funds represents a great opportunity for the development and consolidation of a business. All the implemented programs by the department for SMEs which are subordinated to the Romanian Government take part in the development and in the enriching of the entrepreneurial qualities among the young people and not only to them.
The Minimis schemes implemented through the national programs of encouraging the establishment of new companies and of supporting the development of small and medium business at a national and local level, according to governmental strategies for supporting the development of small and medium business and to the government program are technically and financially managed by the Policy Direction of Entrepreneurial and Implementation Programs for SMEs (DPAIPIMM).
In 2015, the following programs were underway (http://www.aippimm.ro/categorie/
programmee/programmee-2015/, accessed on the 12th of January 2016):
o The program for the development of entrepreneurial skills among young people and facilitating their access to financing START 2015;
o The program for the creation and development of micro-enterprises by young entrepreneurs SRL D 2015;
o The program for developing entrepreneurial culture among women managers in SME sector 2015;
o The development and modernization of the business of selling products and services market program 2015;
o The national program for support trades and crafts 2015;
o UNCTAD / EMPRETEC program (EMPRETEC is a United Nations program established by UNCTAD's Division of Investment and Enterprise to promote the creation of sustainable small- and medium-sized enterprises (SMEs).- http://www.unctadxi.org/templates/Page____7362.aspx)
o The helping Minister scheme established through Government decision nr. 274/2013 regarding the Minimis aid for the made investments by the small and medium business;
o The Romanian-Swiss program for SMEs (PRESMEs);
o Romanian program – HUB;
o The national multiannual program for creating and developing technological and business incubators.
This study analyzes two of the main national programs for the SMEs, which were developed and implemented by the Policy Direction of Entrepreneurial and Implementation Programs for SMEs (DPAIPIMM) between 2009 and 2015: The program for the development of entrepreneurial skills among young people and facilitating their access to financing START 2015 and The program for the creation and development of micro-enterprises by young entrepreneurs SRL D 2015.
The Program for the Development of Entrepreneurial Skills Among Young People and Facilitating their Access to Financing Start 2015
If we talk about the program for the development of entrepreneurial skills among young people and facilitating their access to financing START 2015, the electronic registration application was active on the website www.aippimm.ro starting from 22.06.2015 at 10.00 o'clock and closing on 01.07.2015 at 20.00. The total number of applications for the program was 1036, presented in the following table.
Table 1. The synthetic status of the development of entrepreneurial skills among young people and facilitating their access to financing START 2015 program for the year 2015
Budget Program
Lei
Total sub- scribers
Total of applic-
ations submit- ted
Required budget
when they were submitted
Evalu- ated appli- cations
Admitted appli- cations
Rejected appli-
cations Contracts Contrac- ted budget
Paid appli- cations
Paid budget
Absor- ption level
20.000.000 1036 929 115.535.
133 352 222 130 158 18.316.634 149 16.825.654 84.13%
Source: available processed data at
http://www.aippimm.ro/files/articles_files/39/6402/raportdpaipimm2015.pdf, accessed on 2.06.2016 Taking into consideration the jams in the national allocated budgets, as well as the long period of time of making service acquisitions needed for the launching of the programs by the Ministry support directions, all the seven national programs and the Minimis scheme managed according to HG 274/2013, started later every year with negative effects visible to their implementation, a
situation which was noticeable in Figure 1, in the section: the evolution of the number of beneficiaries of the START program between 2009-2015.
Fig. 1. The evolution of the number of beneficiaries of the START program between 2009-2015 Source: developed based on the data available on http://www.aippimm.ro/categorie/programe/impact- programe-nationale-2009-2014/, accesed on 06.07.2016
From Figure 1 we can conclude that the beneficiaries' status of the START program between during 2009 and 2015, which mostly oscillated, the situation being unsteady from this point of view, as the number of beneficiaries of this program was very low between 2009 and 2010. One reason for this, could have been that Romania wasn't ready yet and wasn't able to adapt to such cases and projects. In time, the situation improved and raises were noticed from this point of view in the year 2012. In this year, the greatest number of beneficiaries from the START program was registered. This great number may have been registered mostly because of the fact that young Romanians have begun to understand and create better and eligible project from all points of view.
The research of Crăciun, L. et al. (2015) has focused on perceived characteristics of a leader and their influence on the organization’s results. The six factors identified by the analysis were:
adaptability, cooperation, authority, charisma, confidence, motivation of a leader.
We have analyzed the results of implementing the START program in the year 2015 and we have noticed that a number of 493 jobs were created and maintained for three years, starting from the next year, when financial non-refundable aid has been granted to the program. Another accomplishment of the program was represented by the 149 new investments, whose percentage was greater than 60% in the new innovative technologies.
While examining the available results of the program on the website http://www.aippimm.ro/files/articles_files/39/6402/raportdpaipimm2015.pdf, accessed on 12.09.2016, we found out that in 2015, the two offices which registered the greatest number of jobs, created and maintained for three years, starting from the following year AFN was granted, were OTIMMC Cluj (46,45%) and OTIMMC Ploiesti (23,73%).
From the perspective of the new jobs created, when START project were implemented in Romania, it was noticed that this situation had improved, as new jobs were created. This situation changed positively every year, even if the year 2010 wasn't a favorable year from this point of view. The last years, between 2011 and 2015 represent a positive situation for the general condition in Romania regarding the employment, as even if there aren't thousands of new jobs created by the SMEs. These SMEs have produced a rise in the number of employees, who are paying their taxes.
In table number 2, the synthetic status of the applications' registration and settlement within The development of entrepreneurial skills among young people and facilitating their access to financing START 2015 program. In the year 2015, the greatest number of applications were submitted (1036 applications) for the entire analyzed period, with 37,11% more than in the year 2014, but fewer applications were settled than the previous year, meaning 149 applications as opposed to 167 applications in 2014. This means 10,77% less applications were settled in 2015 as opposed to the year 2014.
81 63 132
189 163 167 149
0 50 100 150 200
2009 2010 2011 2012 2013 2014 2015
Table 2. The applications status at national level regarding the START program implementation between 2009 and 2015
Year Number of Registrations
Applications submitted
Applications accepted
Applications
rejected Paid applications
Percentage of paid applications
in registered numbers
2009 364 169 120 49 81 29,48%
2010 658 240 78 162 63 9,57%
2011 416 298 134 164 132 31,73%
2012 522 336 194 142 189 36,20%
2013 795 740 376 364 163 21,47%
2014 636 581 347 234 167 26,25%
2015 1.036 929 222 130 149 14,38%
Total 4.427 3.293 1.471 1.245 944 21,32%
Source: processing and completing date from the National Impact Program 2009-2014 AIPIMM available at http://www.aippimm.ro/categorie/programmee/impact-programmee-nationale-2009-2014/
From the analysis of the data in the table, which represents the application status for the START program at a national level, we can conclude that the situation is rather balanced as the number of applications has risen every year, but the number of the applications entirely submitted is not the same with the ones registered, while accepted applications are half the ones submitted. From all these, not all are paid, as the number of applications submitted is different from the ones that are paid.
The Program for Stimulation of Creating and Developing Micro- Enterprises by Young Entrepreneurs 2015
The implementation procedure of the Minimis funds transparent scheme as presented in The program for the creation and development of micro-enterprises by young entrepreneurs sets up an explicit scheme. Granting the Minimis funds within this program will be accomplished only by precisely observing the rules concerning the Minimis funds presented in C.E. Regulations no. 1470/2013 regarding the observing of article 107 and 108 from the Minimis Fund Treaty, published in The Official Journal of the European Union no. L352/24.10.2013.
The objective for The program for the creation and development of micro-enterprises by young entrepreneurs consists of developing the entrepreneurial skills based on the knowledge and best management of the resources, in order to quickly adapt to the rigors imposed by the market globalization, stimulating and supporting the start and the development of the start-up companies by easing the access of the young entrepreneurs to business and to the financial sources (www.aippimm.ro).
The revised budget for the Minimis scheme for the budget year of 2016, approved through the appendix number 3/36/26 by the Law number 186/2015 of the State Budget for the year 2016, is 19300000 lei with the hope of addition in order to receive non-refundable funds. Putting in practice this program in 2016 will mean giving Minimis funds to at least 430 beneficiaries.
If we refer to the program stage, the electronic application was active on www.aippimm.ro starting from 10.09.2015 at 10.00 until 24.09.2015 at 20.00. The number of applications was 580.
Table 3. Synthetic status of the program for the creation and development of micro-enterprises by young entrepreneurs SRL-D for the year 2015
Budget Program
Lei
Total regis- tered
Total appli- cation s
Required budget at appli- cation
Evalu- ated appli- cations
Accep- ted appli- cations
Rejec- ted appli- cations
Contracts Contracted budget
Paid appli- cations
Paid budget
Absor- ption degree 19.300.000 580 536 22.645.9
75 536 262 274 165 7.137.542 138 5 737
318.08 29,51%
Source: processing of available data at
http://www.aippimm.ro/files/articles_files/39/6402/raportdpaipimm2015.pdf, accessed on 12.07.2016 I have analyzed the results of implementing the program Young entrepreneurs SRL-D in 2015 and we have noticed that there have been created and maintained for 3 years, starting from the next year when the non-refundable fund was granted, a number of 459 new jobs and a number of 16 graduates/unemployed, who have started SRL-D through the program. Another accomplishment of the program was the number of new investments, 123, whose percentage was greater than 60% in new innovative technologies and 76 program investments in fields like IT and production, which were a priority.
In table number no. 4 we have showed the beneficiaries status in The program for the creation and development of micro-enterprises by young entrepreneurs SRL-D divided in the 8 Territorial Offices subordinated to the Direction.
Table 4. The status of the program's beneficiaries Young entrepreneurs SRL-D divided in Territorial Offices
Territorial Office
Number of registrations
Number of evaluated applications
Number of contracts
Paid applications
Braşov 52 48 17 17
Cluj 246 231 102 84
Constanţa 59 53 17 13
Craiova 17 15 3 3
Iaşi 28 24 3 3
Ploieşti 100 92 16 11
Tg. Mureş 18 16 1 1
Timişoara 60 57 6 6
TOTAL 580 536 165 138
Source:http://www.aippimm.ro/files/articles_files/39/6402/raportdpaipimm2015.pdf, accessed on 14.07.2016
By analyzing table number 4, we can notice that OTIMMC Cluj has reached the performance of gathering the most applications 42,41% of the total submitted applications, settling a percentage of 60,86% of the paid applications total through the The program for the creation and development of micro-enterprises by young entrepreneurs SRL-D 2015.
Table 5. The status of Program’s SRL-D 2015 results for Territorial Offices
Territorial Office
Number of new jobs created and maintained for 3 years starting from the next year after the AFN granting to
the program
Number of graduates/unemploye
d who have started a SRL-D through the
program
Number of new investments
whose percentage is
greater than 60% in new, innovative technologies
Number of investments on program in priority fields: IT and
Production
Braşov 67 0 17 14
Cluj 270 9 77 43
Constanţa 50 3 13 10
Craiova 11 0 3 1
Iaşi 10 0 1 1
Ploieşti 31 2 7 6
Tg. Mureş 4 0 1 0
Timişoara 16 2 4 1
TOTAL 459 16 123 76
Source: http://www.aippimm.ro/files/articles_files/39/6402/raportdpaipimm2015.pdf, accessed on 14.08.2016
Forwards, while examining the program's results, in the year 2015, we can notice that the 3 Offices, which have registered the greater number of new jobs, created and maintained for 3 years, starting from the next year after the granting of AFN for programs, are: OTIMMC Cluj (58,82%), OTIMMC Brasov (14,59%) and OTIMMC Constanta (10,89%), according to figure number 2.
Fig. 2. The number of new jobs created and maintained for 3 years starting from the next year after the granting of AFN for The program for the creation and development of micro-enterprises by
young entrepreneurs SRL-D 2015
Source: http://www.aippimm.ro/files/articles_files/39/6402/raportdpaipimm2015.pdf , accessed on 23.09.2016
As with the case of START program, the SRL-D program offers young entrepreneurs a number of possibilities of putting into practice their business ideas, the only thing that they have to do is access such a program.
Conclusions
The SME field represents one of the key-elements in the development of the European Union, especially in the economic and social field, its crucial role in this process being formally recognized and also taken into consideration in the strategies at the community level.
67
270 50
11 10
31 4
16
0 50 100 150 200 250 300
Braşov Cluj Constanţa Craiova Iaşi Ploieşti Tg. Mureş Timişoara
An economy abundant in competitive SMEs generates economic stability on the long term, which leads to an improvement in the life-style for most people, in the context of a social, economic and environmental balance. Besides the skill of having contributed to the emergence of a private field stronger day by day, some of these SMEs feature a special flexibility and capacity of adapting to the new, showing a remarkable driving force of the economic progress in Romania. The main elements of the sustainable development of SMEs – people, planet, profit- must be regarded as a synergistic concept which leads to an efficient social, economic and ecological activity.
Accessing the non-refundable funds granted by the Romanian Government represents an important financial source for SMEs, but there are a series of barriers which turn the success of these projects into an unexpected one, because the submitting of the applications, the candidates registration, the projects presentation, their evaluation, the scores and then the agreement on the project, stretches for a long period of time, during which the young graduates can no longer find hope that things will improve and that all their ideas will become reality.
Accessing the funds through different programs created for this reason is a laborious matter, first of all the applicant must be aware of the advantages and of the disadvantages of the programs, he/she must decide to which program his/her project can fit, and in the end he/she must be aware of the fact that in our country things have started to work, but however, things are not the same as in the other member states, in which such programs are accessed more easily, as there aren't bureaucratic or legislative barriers, which hinder putting into practice the eligible and good parts for the future project.
The civil society, the partnership between authorities and entities at the regional, local level, with the involvement of the social and economic representatives, NGOs, contributes to the creation of a more transparent and honest framework, which deals with the non-refundable funds, contributing to the increasing of the authorities availability in offering information on the funds and in organizing public consultations regarding the applicant guides, which explains the application procedure for the European funding programs, ensuring the informing in time of the potential beneficiaries in order for them to create efficient projects. (Alistar, V. (coord), 2008).
In conclusion, after studying the results of implementing The program for the development of entrepreneurial skills among young people and facilitating their access to financing START 2015 and the program Young entrepreneurs SRL-D in 2015, I noticed that if you are a 2014 graduate or unemployed which founded an IT company, creating at least four jobs through project implementation or if the company purchase technological equipment at least 60% of the project and if the manager has or will have theoretical knowledge on business management, the applicant will receive money from the Policy Direction of Entrepreneurial and Implementation Programs for SMEs. The level of absorption of funds depends on the period of releasing the programs and the conditions of implementation that underwent successive changes from year to year.
There is a real major interest from the Romanian state for implementing such projects, and its support for increasing their number, especially because by creating new SMEs, new jobs will be created and of course the state contributions will also increase. Things have been looked into more attentively, maybe because the public has been more informed, and the number of projects has visibly increased.
References
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