The European Union (EU) enacted the Small Business Act (SBA) in 2008 with the intention of bolstering small and business-sized businesses, stimulating the economy and broadening the market. Small and medium-sized businesses are the heart of the EU economy. Those 20.8 million such businesses provide nearly three-quarters of EU private sector jobs, according to Euractiv. Helping these businesses succeed only makes sense for the overall EU economy.

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What the Small Business Act Entails

The SBA outlined 92 recommendations in 10 principal areas, all designed to help small and medium-sized businesses grow to their full potential. These recommendations included reducing the regulatory burden for small businesses, making small business funding easier to obtain, simplifying VAT (value-added tax) invoicing, helping to improve small business access to new markets and helping small businesses compete in emerging markets, according to an EU press release.

The recommendations of the SBA also sought to cut the red tape associated with meeting and reporting on environmental regulations and to promote business among companies in member nations. One example of how this principle of cooperation is working is the new offering of Blackberry curve phones on T-mobile plans, which include an unlimited European plan that breaks down the barriers between member countries.

Realities of SBA 2008

Whether the SBA has lived up to its promise is subject to some debate and results vary among different member countries. Some countries, such as Greece, Spain and Ireland, have been plagued with severe economic downturns that have hampered implementation of the SBA.

One political blog, the European Sting, called the SBA a “complete failure.” It cites the large number of small businesses that have gone under since the Act was adopted. But there are positive results from the SBA. A directive has been issued to lending institutions of member countries to relax their penalties for late payers, as it affects lines of credit and cash flow for small businesses. The SBA has also led to the establishment of a Small Business Enterprise Centre in China to assist companies from member nations who wish to do business there. A proposal is also in the works to simplify the rules for public procurement and make it easier for small businesses to win government contracts.

The Bottom Line

The SBA may not have had the impact on small businesses in Europe that the EU may have hoped for; at least not to date. The recommendations outlined in the act are far from dead. New proposals and bills continue to be brought before the EU Commission with the aim of helping small businesses succeed. Austerity and bailouts have been a detriment to interstate commerce, but sectors such as e-commerce and cloud computing are continuing a trend of hiring and profitability, according to The 2013 SME Assembly, which will further discuss the initiatives of the SBA, is scheduled for November 25 and 26 in Lithuania, states

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