Euro area SMEs see financial situation improve


SMEs across the euro area continued to indicate improvements in the availability of external sources of finance from October last year to March this year, according to a new report from the European Central Bank.

The latest Survey on the Access to Finance of Enterprises shows that things have improved further on the previous survey round, albeit at a slower pace.

From October 2017 to March 2018, the percentage of euro area SMEs reporting a higher turnover decreased – 24%, down from 27%. The moderation in turnover was also reflected in profits, as 4% of euro area SMEs reported increases, down from 5%, in a context of growing labour costs (50%, up from 49%) and other production costs (54%, up from 48%).

In net terms, SMEs continued to indicate improved availability of bank loans (14%, from 12%), with the highest percentages in Spain (24%), Portugal (19%) and Ireland (18%). SMEs attributed these improvements to a persistently high willingness of banks to provide credit (19%, up from 18%).

Although Greece continued to lag behind the other euro area countries, there are also signs there of an incremental improvement in the willingness of banks to provide credit since the beginning of 2017.

SMEs signalled that the fall in interest rates on bank loans became more muted. At the same time, they registered a moderate increase in other costs of financing, such as charges, fees and commissions.

To emphasise the importance of banks for the financing decisions of firms, this survey round included ad hoc questions on firm/bank relationships along three dimensions: number, duration and exclusivity.

The results suggest that SMEs tend to do business with less than three banks, on average. Long-term relationships prevail across different firm sizes; however, the concentration of loans varies across countries, reflecting the heterogeneity of financial structures across the various euro area countries.