Strategies of the Development of Entrepreneurship and SME

In August 2006, the Republic Agency for Development, together with ENTRANCE team,establishes the Center for support to foundation of business incubators (BusinessIncubator Support Center-BISC), defining in more details, the forms of support for both,already established incubators and incubators in development phase.The goals of BISC services:• BI functioning stabilization according to ENTRANSE methodology• Active role of BISC in achieving the stability of existing and activities of new BI• Offering all necessary forms of support to implementation teams• Creating of stronger connections and common activities of existing BI• Involving all relevant institutions in support activities, both to existing and new BI• Creating of new commercial services for existing BI• BI, included in relevant support programs, carried out by RASME (internationalization,B2B, fair Business Base etc.).3.4.5. FINANCING SMEs IN SERBIAIn general, the infrastructure of financing the SME’s sector in Serbia is still ratherundeveloped. Predominating is two the most important source groups:I – Governmental institutional channels including:• Direct governmental support of financing the SME’s sector financing through acceptablecredits provided by the Development Fund of the Republic of Serbia. These kind ofcredits are granted, and the interest rate is rather low (in some cases only 1% onannual level), accompanied by the significant grace period. The problem is that thesesources are limited.• Indirect governmental support, through other institutions, such as the Agency for theDevelopment of Small and Medium Enterprises and Guarantee Fund. The Agencyprovides linking services with international financing sources, while the Guarantee Fundprocure the credit guarantee services that SME’s take from commercial banks, reducingto great extend the risks level, and consequently, the interest rates.II - Banking channels - comprise a number of credit types granted to SME’s sector.Because of the adopted restrictive monetary policy directed towards inflation restraining (inSerbia, in the year 2007, the expected inflation shall be between 8-9%) the credits are veryexpensive and the interest rate is fluctuating between 10-12%, sometimes even higher, at theannual level). The high interest rate is the consequence of the high credit risk level, and thathas a great influence on the small and medium enterprises sector.The SME’s sector is considerably limited on the capital market. The Belgrade StockMarket every year exhibits the turnover growth, in the transaction volume, as well as thevalue, but that is a place that mostly deals with privatization process shares. There was no onereal initial public offering (IPO). Many entrepreneurs show the interest, but still, it has to pass along period till the conditions will be created that the capital shall be relatively easilyaccumulated by share issuing. The situation with the issuing of corporate bonds is even moreadverse, because the market for these kinds of securities hardly exists.The venture capital firms and its legislative forms are not present. Certain investmentfunds, started by the end of 2006, when the Law on Investment Funds has been adopted,initiate to analyze the situation and to inaugurate such kind of operations. The similar situationis with the private equity funds and business angels. The good notice is that in Serbia isdeveloping the significant group of institutional investors. Besides the investment funds, there63