Proceedings of The 8th International Conference on Business, Management and Economics
Government Support for Smes in Time of Crisis – A Study on Firm-Level Data
Åsa Grek, Reza Mortazavi, Carin Nordström, Fredrik Hartwig
Small and medium-sized firms (SME) are the economic drivers in the economy. SMEs stand for the most innovation capacity and account for 95 % of firms and between 60-70 percent of the employments within most OECD countries [1,2]. As a result, protecting the SMEs during the worst COVID-19 restrictions was essential for many governments [3,4,5]. Governmental support can include loan, loan warranties, tax reliefs, social- and financial support systems [6,7]. The government support systems can help the SMEs to become innovative, grow and survive [8,9]. During the pandemic Sweden offered a different strategy to cope with COVID-19. Complete lockdown was not a part of the agenda, rather social distance, and restrictions regarding maximum number of people in – public areas were imposed [10, 11].
Even with a semi-open society, companies in Sweden still faced the effects of the pandemic, especially SMEs . Therefore, the Swedish government support to SMEs included SEK 5 billion Government Loan Guarantee to SMEs (SEK 120 000 per business) to help SMEs cope with the income lost during the pandemic . Another government support was a short-term allowance, which the Swedish government imposed so the firms could manage the salary payment under the act on short time working (2013:948) . But then how well do this governmental support help the SMEs to survive and grow after the crisis? The aim of this paper is to investigate whether the SMEs which did receive governmental support, as short-term allowance, increased their possibility to survive and how well it did serve them in terms of growth. There are studies which have tried to estimate the effect of governmental support in terms of loan and subsides during a crisis, but they rely on data previous to the COVID-19 crises or on estimated data [3, 4, 5].
The data used in the present study consists of two parts, which has been combined into one large data set. The first part of the data is based on annual reports for all Swedish limited SMEs; for some companies as far back as 2005 and all of them until 2022. The data contain approximately 866 000 SMEs, with more than over 5 000 000 individual firm year, containing more than 60 different accounting variables. These data were combined with data on how much each limited SME obtained as a government support in terms of short-term allowance, which also contain information on when the firms first applied, when the decision was taken, the first month of governmental supported short-term allowance the last month of governmental supported short-term allowance, how much money the SME had been granted totally and if and how much the SME had to pay back of the short-term allowance. The data provide a very rich source of information to test the effect of government loans on the probability of survival of SMEs and the results can inform policy making under crisis.
Keywords: SME, Government support, COVID-19 pandemic, survival, growth, accounting data