2023-11-06 05:54:14
The increase in interest rates and also political uncertainty are taking their toll on the Spanish productive fabric. Specifically, on small and medium-sized companies, which see how bank credit turns off the tap and imposes tougher conditions, while SMEs endure a growth in costs that in just two years has risen up to 19%, thus damaging business margins.
The truth is that the growth of new bank loans to non-financial SMEs has slowed in the second quarter of the year, especially in medium-sized companies. And in total up to 41.4 billion euros have been granted.
A fact that in itself gets even worse if the correction for the effects of inflation is applied to this, where the volume of new loans granted was 9% lower than in the same period of 2019. This is stated in the Report to which THE OBJECTIVE has had access, Financing for SMEsprepared by the Studies service of CEPYME.
Today, new loans are equivalent to 12.7% of GDP, when in 2019 they were equivalent to 14% and in the five years prior to the pandemic they averaged 15%. This is stated in the report to which THE OBJECTIVE has had access, prepared by the Spanish Confederation of Small and Medium Enterprises (CEPYME), with the direction and coordination of Diego Barceló Larrán.
The causes
Without a doubt, one of the causes of the decrease in the volume of credits – the SME Financing Report highlights – is in the restriction and tightening of credit conditions to which SMEs. Restrictions that are given by various factors: some external and promoted by the tightening of the policy of the European Central Bank and other internal ones that 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 It makes it difficult for them not only to access the smallest available credit, but also to have the capacity to present the guarantees required for a loan to be granted.
In this point, Cepyme details how in the months of the pandemic, The SME assumed only 130,000 million euros of ICO lines, destined for fixed expenses and not for investment.
On the other hand – maintains the employers -, the inflationary crisis has also contributed to reducing companies’ margins again, since, on the one hand, costs have increased by 19% in the last 24 months (data from the second quarter of Indicator on the Situation of SMEs), while sales grow essentially oversized due to the effect of inflation, which increases the billing figures, but in the number of goods sold, sales grew by 0.9% in the last yearcorrected for the effects of inflation.
Fewer, smaller loans and less investment
In effect – reasons the Cepyme report – the complex situation that SMEs are going through causes you to demand less credit.
Something verifiable if you analyze the demand for credit and how it has decreased in recent quarters, falling in four of the last six quarters; which on the other hand reflects that uncertainty and rising costs are paralyzing companies’ investment decisions and, therefore, its demand for credit.
Likewise, this lower demand is also combined with the fact that the proportion of rejected loan applications increases and accumulates five quarters of increases, in line with a tightening of granting criteria for six quarters, due to the lower liquidity in the market and a lower risk tolerance, as indicated by the ECB Bank Lending Survey.
Hostile situation
The type of loan to SMEs is another aspect that has evolved, according to the report. And this makes their cost a drag on demand. In turn, the containment of bank financing coincides with a sharp increase in financing costs.
This increase in prices – Cepyme data reveal – has been the most intense since 2000, rising 292 basis points in just one year. Meanwhile, the size of the average loan 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 by the CPI variation.
With this scenario, Less access to credit is one more challenge that Spanish companies face. And it does so – Cepyme highlights – 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 weighs down investment, the development of projects and, therefore, the objective of increasing size, as well as the possibilities of relaunching productivity.
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