Around half of the European SMEs and from the region agree that the most relevant source for financing are the bank related products (credit line, bank overdraft, bank loans) and leasing or hire purchase. Also, companies from the region and the European Union use grants or subsidized bank loans and retained earnings (one third of the companies) as source for financing. On the other hand, market-based instruments, such as equity and debt securities, and factoring are less considered potential source of financing. Chart 11: Relevance of different sources of financing Relevance of the sources of financing for SMEs (average of 2015-2017)  60%  54%  51%  50%  Relevance of the sources of financing for SMEs (average of 2015 -2017)  49%  47% 46%  42% 40% 30%  27%  30%  18%  35%  32% 31%  17%  16% 14% 25%  13%  12% 10%  10%  20%  11%  8%  10%  6% 0% Retained Grants or Credit line, bank Bank loan earnings or sale subsidised bank overdraft or (excluding of assets loan credit cards subsidised bank (Internal funds) overdraft loans, overdrafts and credit lines) EU-28  Trade credit  Leasing or hirepurchase  4%  3%  2%  2% 0% Debt securities  Region  Equity capital  EU-28  Factoring  Region  Source: Survey on the access to finance of enterprises (SAFE), EC and ECB.
The second matter of interest is how to reconcile the current large investment needs of the region, with the already high leverage level, both in the private and public sector, as well. This will be also discussed further in the note. Structural decomposition of investment in CESEE countries vis-à-vis EU points to CESEE countries having larger share of investment in non-residential construction, and, to a lesser extent, in machinery, transport equipment and ICT equipment. This structural characteristic is connected with two historical episodes – first, the transition process, when large investment was needed to replace and renew the outdated infrastructure and second, large capital inflows in the form of FDI before the crisis triggered increase in the imports of machinery and equipment goods. On the other hand, CESEE region faces potential weaknesses in the part of investment activity connected with intellectual property, innovation and R&D. Namely, in all CESEE countries, there is a gap in investment in intellectual property, which, in turn creates critical support for more dynamic increase in productivity and value added, boost economic growth and real convergence. For the whole region, the gap vis-à-vis EU is around 9 p.p., for the period 2000-2008, and 10 p.p, for the period 2009-2017, but for some countries it is even larger (e.g. for Albania the difference is around 17 p.p. in the share of intellectual property vis-àvis the EU share). 6  Chart 7: Investment categories, difference vis-à-vis the EU in the share of the respective category in total investment (p.p.)