European Research Studies Journal Volume XX, Issue 3A, 2017 pp. 57-68 Access to Finance for Latvian SMEs Ramona Rupeika-Apoga1, Irina Solovjova2 Abstract: In this paper, we attempt to explore why banks possessing free assets and willingness to lend, on the one side, and businesses lacking money, on the other side, do not meet. We are looking for answers why all EU initiatives for more available funding for SMEs still haven’t resulted positively and loan growth rate is more than modest. The empirical part of the research is based on the quantitative and qualitative assessment of the commercial banks, SMEs of Latvia and case studies of timber industry. The result of the analyses has been discussed and recommendations have been provided for policy makers and academician, opening new areas for this timely topic research. Keywords: SMEs financing, access to finance JEL codes: G21; L10; O12; 016 1University of Latvia, corresponding author – e-mail:
[email protected] 2University of Latvia Access to Finance for Latvian SMEs 58 1. Introduction Access to finance for SMEs during the past 3 years in general has improved, nevertheless remains wide divergences across the euro area countries. In 2016 access to finance remained the dominant concern for SMEs in Greece (31%,), while 13% of SMEs in Italy and 12% in both Ireland and the Netherlands named access to finance as the most important problem, compared with only around 6% of SMEs in both Austria and Germany and 8% in Finland (European Central Bank, 2016). In Latvia in 2016 the most important problems faced by SMEs were finding customers (20%), availability of skilled staff or experienced managers (15%), competition (13%), costs of production or labour (12%) and finally access to finance with 10% as the fifth most pressing obstacle (Kwaak and Zeijden, 2016).