Credit becomes more expensive for businesses

The European Central Bank (ECB) reported on October 26 that credit is becoming more expensive and less available for businesses in the euro area. The survey shows a significant increase in bank interest rates for large companies, with 55% reporting a rise, compared to 41% in the previous quarter. For small and medium-sized enterprises (SMEs), the increase is smaller, from 43% to 38%, but still remains high.

Loan availability decreases

The availability of financing is also declining, particularly for large companies. The balance of responses shifted from +4% in the second quarter to -6% in the third, while for SMEs it remained negative at -5%. Across the euro area, the balance on loan availability dropped to -5%, compared to -1% in the previous quarter.

Banks tighten guarantees and fees

Banks are tightening their lending conditions, with a net balance of 14% of businesses reporting stricter guarantees, up from 10% previously. Fees and commissions also increased, with a net balance of 27%, down slightly from 31% in the second quarter. Additionally, 7% of businesses reported obstacles in obtaining loans, compared to 5% in the previous quarter.

Businesses still apply for loans

Despite these challenges, the proportion of businesses that have applied for a bank loan remains nearly the same, at 22%, compared to 23% previously. Among those who have not applied, the most common reason is having enough internal resources. The survey highlights a tightening of lending conditions for some businesses, but not a complete halt in credit availability.

France’s SMEs face rising costs

In France, the Bank of France noted on October 20 that 41% of SMEs and 58% of medium-sized companies saw an increase in credit costs in the third quarter. However, 96% of SMEs that applied for investment credit received at least three-quarters of the requested amount. The ECB survey included 12,822 companies, with 93% employing fewer than 250 people, and highlights that new respondents may affect the interpretation of some data trends.