The rises in interest rates are not only starting to make mortgages more expensive, but also loans to companies. The Bank of Spain has just verified the first problems for SMEs to access financing since 2013 and warns that these companies expect a “notable intensification of deterioration” of loans in the first quarter of 2023.
Interest rates are already at 2.5% and the ECB has announced further increases. The effect of the increases in the price of money that began in July has been, with the latest data available, a Euribor above 3% in the monthly average and rates for business financing of 3.09%. This last percentage corresponds to November and is offered by the Bank of Spain itself.
SMEs have already experienced a worsening of their situation and, at the end of September, the percentage of those reporting difficulties has increased by eleven points, according to the survey carried out by the Bank of Spain and the analysis that accompanies it, carried out by the researchers Álvaro Menéndez and Maristela Mulino.
The worsening has not been as pronounced as expected and occurs throughout Europe
Bank loans are the main source of financing for SMEs, which have at least two reasons to console themselves: the worsening of conditions up to September has not been as pronounced as they expected and they affect Europe as a whole, so they do not lose competitiveness at least on the continent.
In Spain, the deterioration in the ability of small and medium-sized companies to access external financing is the first since 2013, while in the euro area as a whole access to bank loans has worsened for the first time since 2014. However However, the evolution for the moment is far from what occurred at the beginning of the financial crisis of 2008, points out the Bank of Spain report.
For this quarter, companies speak of a “notable deterioration”
The forecast for SMEs until March 2023 now consists of “a notable intensification of the deterioration in access to financing”, which is not due to specific business circumstances, but to the “worsening of the general economic outlook”.
The percentage of SMEs reporting an increase in interest rates and the cost of accessing new debt was equivalent to 70% at the end of September, which is the highest increase since the Bank of Spain carried out this survey. The percentage is higher than that of the euro zone, where it stood at 64%. SMEs also appreciate an increase in the guarantees required by banks and financiers.
10% have financing difficulties, compared to 20% in the 2008 crisis
The percentage of SMEs that had difficulties obtaining bank financing rose to almost 10% in September, one and a half points more than six months earlier, although this indicator is at low levels, especially when compared to what happened in the crisis when it reached over 20%.
The increase in the difficulties to obtain financing was due above all to an increase in rejected applications and, to a lesser extent, to an increase in the percentage of SMEs that only granted part of the loan they had requested.
Less demand for loans
There has also been a “slight decline” in the demand for loans because in some cases the SMEs themselves refuse to request financing in anticipation of being rejected. The ECB survey also shows that the proportion of SMEs that applied for bank credit between April and September 2022 remained at relatively low levels, at 21%.
Financing is not for now the main concern of SMEs, which continue to identify the increase in production costs as the main problem in Spain. In the euro zone, they allude to other problems such as the shortage of qualified personnel.