The financial crisis impact on Lithuanian SME's access to finance

Abstract

The recent financial crisis affected all businesses but SMEs went down with shrinking employment and activity volumes because of prolonged uncertainty and economic downturn, decreased lending volumes and tightened requirements by finance institutions. External financing sources continues to be a significant component of SMEs performance. The access to finance is recognized as a key challenge and a barrier for SMEs recovery in most of the countries. The paper presents the analysis of the influence of recent global financial crisis on Lithuanian SMEs’ access to finance, discusses the conditions of external financing with state intervention measures. Research results have revealed the easing general credit standards for Lithuanian businesses, but the demand is not yet met and is far from satisfactory. There have been various state intervention measures applied, but the promotion of mezzanine finance and equity or quasi equity guarantees are suggested.