2023-11-06 01:11:48
MADRID, 06 (SERVIMEDIA)
The value of bank loans to Spanish SMEs in the second quarter of 2023 was 9% lower than in 2019 if the effect of inflation is corrected, which reflects the growing difficulties that these companies are beginning to have in accessing the financing as a result of the successive interest rate increases undertaken by the European Central Bank (ECB).
This is clear from the ‘SME Financing Report’ prepared by the Studies service of the Cepyme employers’ association, which highlights that, without correcting inflation, new bank loans granted to SMEs in the second quarter only grew 5.4%, which represents the lowest increase recorded since June 2021.
“The lower liquidity in circulation that there is now in the market translates into a lower volume of credit to which the SME has access. So new loans are now equivalent to 12.7% of GDP, compared to 14% in 2019 and 15% in the pre-pandemic five years,” the report explains.
According to Cepyme, small and medium-sized companies face a “restriction” and a “tightening” of credit conditions due to various factors. The external ones focus on the tightening of the ECB’s policy, and the internal ones, which derive from the “wear and tear that SMEs have suffered since the pandemic and that has significantly deteriorated the balance sheets of many companies, which makes it difficult for them not only to access the lowest existing credit, but also having the capacity to present the guarantees required for a loan to be granted.”
In this regard, the employers’ association recalls that in the months of the pandemic, the SME assumed only 130,000 million euros from ICO lines, destined for fixed expenses and not for investment. And, secondly, the inflation crisis has once again reduced companies’ margins.
Thus, on the one hand, costs have increased by 19% in the last 24 months (data from the second quarter of the SME Situation Indicator), while sales are growing essentially oversized due to the effect of inflation, which raises billing figures, but in number of goods sold, sales grew by 0.9% in the last year, corrected for the effects of inflation.
LOWER DEMAND AND MORE REJECTIONS
The complex situation that SMEs are going through causes them to demand less credit: credit demand has decreased in recent quarters, falling in four of the last six quarters, which according to this report, uncertainty and increased costs paralyze the investment decisions of companies and therefore their demand for credit.
In fact, among the causes that are seen to explain the drop in its financing requirement are mainly lower investment, the increase in interest rates and the fact that loan renegotiations have been brought forward to previous quarters.
The lower demand is combined with the fact that the proportion of rejected loan applications increases and accumulates five quarters of increases, in line with a tightening of the granting criteria for six quarters, due to the lower liquidity in the market and a lower tolerance to risk, as indicated by the ECB’s Bank Loan Survey, which indicates that the worse general economic situation and the uncertainty of the situation in many sectors specifically are evolving adversely for concessions.
INCREASE IN COSTS
On the other hand, SMEs are suffering from an increase in costs when they manage to access credit, since the average interest on new loans to SMEs rose to 4.36% in the second quarter of this year, its highest value since 2008. The increase in prices has been the most intense since 2000, rising 292 basis points in just one year.
Regarding the size of the average loan, this is significantly lower than that received in the second quarter of 2019, with a decrease of 7.5% in small companies and 16.1% in medium-sized companies, in terms corrected for the variation of the CPI.
“Less access to credit is one more challenge that Spanish companies face. In the midst of a hostile situation like the current one in terms of inflation, interest rates, uncertainty and a context of high regulatory, tax and labor burdens, the slackness in credit to SMEs hampers investment, project development and, therefore, “both, the objective of gaining size, as well as the possibilities of relaunching productivity,” concludes this association.
(SERVIMEDIA)06-NOV-2023 00:01 (GMT +1)DMM/clc
© SERVIMEDIA. This information is property of Servimedia. It can only be disseminated by the clients of this news agency citing Servimedia as the author or source. All rights reserved. Distribution and public communication by third parties through any means or medium is prohibited.
#Loans #SMEs #compared #discounting #inflation