EBA discussion paper and call for evidence on SMEs and the SME Supporting Factor : preliminary analysis and call for evidence for the EBA report on SMEs and SME Supporting Factor in accordance with the EBA mandate in Article 501 CRR

Following the introduction of stricter capital rules by the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRDIV), and in the context of credit tightening after the financial crisis, a capital reduction factor for loans to small and medium enterprises (SMEs) – the so-called SME Supporting Factor (SF) - was introduced by the CRR to allow credit institutions to counterbalance the rise in capital resulting from the capital conservation buffer and to provide an adequate flow of credit to this particular group of companies. In this context, the EBA has the mandate to report to the European Commission on 1: a) an analysis of the evolution of the lending trends and conditions for SMEs [...]; (b) an analysis of effective riskiness of Union SMEs over a full economic cycle; and (c) the consistency of own funds requirements laid down in the CRR for credit risk on exposures to SMEs with the outcomes of the analysis under points (a) and (b). In fulfilling its mandate, the EBA will provide input to the Commission’s own report on the impact of own funds requirements as set out in the Regulation on lending to SMEs. The current Discussion Paper and Call for Evidence aims to provide a basis for a preliminary discussion on the issues to be addressed in the final EBA report and to collect evidence from the industry and other stakeholders to further substantiate the proposals in the final report as well as potential objections and alternative proposals.Following the introduction of stricter capital rules by the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRDIV), and in the context of credit tightening after the financial crisis, a capital reduction factor for loans to small and medium enterprises (SMEs) – the so-called SME Supporting Factor (SF) - was introduced by the CRR to allow credit institutions to counterbalance the rise in capital resulting from the capital conservation buffer and to provide an adequate flow of credit to this particular group of companies