The European Parliament’s Economic and Monetary Affairs (ECON) Committee has backed alternative sources of funding, including leasing, alongside bank funding for SMEs.

The committee voted to back initiatives raised by MEP Othmar Karas on "Access to finance for SMEs and increasing the diversity of SME funding in a Capital Markets Union".

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Leaseurope said the report was a notable step in EU policy action to reinforce the recognition of leasing as means to finance SME investment.

The report acknowledges the need for diverse funding options for European SMEs, and recognises leasing as an important form of finance for smaller businesses.

This report follows the European Commission’s action plan, adopted on 30 September 2015, for building a Capital Markets Union (CMU) to mobilise capital in Europe and to support the development of alternative sources of finance, complementary to bank financing.

Leon Dhaene, director general of Leaseurope, said that: "Given that EU small businesses still lean heavily on traditional financing sources, such as bank loans, raising firms’ awareness about the funding options available to them is crucial. Leasing’s economic significance lies in the fact that it is a major source of investment support for European firms. Indeed, leasing was responsible for financing just over 9 million individual SMEs and about €104 billion of European SME investment in fixed assets in 2013".

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"Leasing should be treated in a consistent way across all European institutions and its concerns adequately considered in terms of appropriate European legislation.

"The fact that leasing prominently features in this report clearly shows it is being increasingly recognised in EU policy action".