Small businesses across the European Union are less concerned about their ability to access loans and working capital products, according to the European Central Bank, which just released its latest Survey on the Access to Finance of Enterprises (SAFE) report, released Wednesday (Dec. 2).
The ECB’s findings suggest a few stark contrasts between the April-to-September period, for which this report was generated, and the October-to-March period, which was covered in the previous SAFE report.
Across more than 11,000 businesses that responded to the EU’s survey, just 11 percent of them cited access to finance as their chief concern – the same percentage as reported in the previous SAFE report, making for the least-pressing issue for these businesses.
The need for bank loans actually dropped among SMEs, with just 1 percent of respondents citing improvement of bank loan availability as a major need (compared with 3 percent in the last report).
[bctt tweet=”Just 1% of EU SMEs cited improvement of bank loan availability as a major need”]
As it would suggest, the survey also found that access to bank loans across the EU has improved, making this the second consecutive SAFE report that came to this conclusion.
Less than one-third of SMEs questioned applied for a bank loan, but two-thirds of the applicants were approved for the full amount they requested, reports said. Only 9 percent reported getting rejected for a bank loan. According to the businesses surveyed, these increases are the result of banks becoming more willing to lend to a small business, though positive firm-specific outlook, capital levels and credit history were also cited as having improved and contributed to higher levels of bank lending.
The ECB concluded that for those businesses that did take out a loan, the financing was used for working capital, inventory, and fixed investment.
The view on prioritizing access to working capital shifts across national borders, however. For example, SMEs in Ireland and the Netherlands reported a greater worry about their ability to find funding, with 13 percent citing this concern. Just 7 percent of German, Austrian, and Finnish small businesses, however, said the same.
Across Belgium, Germany, Finland and the Netherlands, businesses reported a declining need for financing from external sources. Meanwhile, Germany, Spain and – for the first time since the SAFE report began – Italy reported an increase in the availability of traditional bank loans.
By far the largest outlier was Greece, plagued by economic turmoil this year; 30 percent of small and medium-sized enterprises in this nation said access to finance was their greatest challenge.
As a whole, European small businesses appear less stressed about their ability to find funding. Instead, SMEs across the region are more focused on customer acquisition and the volume of their incoming business.
Reports also noted that access to skilled workers, production costs, market competition and regulations are also weighing down on the minds of small business owners in the Eurozone.
Further, 41 percent cited rising labor costs as a hurdle to their growth and success. On the other hand, just 1 percent of SMEs surveyed by the ECB said that their profits declined during this period – a major improvement compared to the 10 percent of SMEs that cited declining profits in the last SAFE report.
Looking ahead, the ECB found that small businesses are anticipating an improvement on their balance sheets. However, this time, slightly fewer SMEs than found by the earlier report are expecting bank loan availability to improve over the next six months.
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