CMU, securitisation and small and medium enterprises

Across the European Union (“EU”), barriers exist that prevent small and medium-sized enterprises (“SMEs”) from raising capital that is required for growth. Banks are lending less and less to SMEs, a trend that is only expected to continue in light of more stringent capital requirements. Regulatory changes, pending or enacted, have inhibited the raising of capital, rather than promoting it. For example, Venture Capital Trusts have been a long-standing provider of funding to SMEs but the recently enacted Finance (No. 2) Act in the UK has effectively restricted what Venture Capital Trusts can invest in. Furthermore, the introduction of MiFID II will result in certain investors being considered as retail rather than institutional, hence limiting what they can invest in.