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Eurozone SMEs say access to bank loans deteriorating: ECB

27 April 2012, 10:59 CET
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(FRANKFURT) - Small and medium-sized businesses in the eurozone say getting bank loans has become harder, according to the results of a survey released by the European Central Bank on Friday.

While firms' external financing needs have increased between October and March, "the survey results show that access to bank loans continued to deteriorate," the ECB said in a statement.

For the survey, the ECB polled a sample of 7,511 companies in the 17 countries that share the euro, most of which had a workforce of fewer than 250 employees.

The central bank conducts the survey at six-month intervals and the results this time round are particularly pertinent in the wake of the ECB's decision to pump more than 1.0 trillion euros ($1.3 trillion) into banks since December in a bid to avert a credit crunch in the single currency area.

The money was made available to banks at rock-bottom interest rates in the hope they would lend it on to households and businesses, thereby keeping the eurozone economy up and running.

But available data so far appear to suggest that lending activity remains low and the banks are even tending to park the cash on deposit at the central bank rather than take the risk of loaning it out.

The SME survey appears to back this up.

"On balance, firms reported a worsening in the availability of bank loans," with 20 percent of companies finding that this was the case, compared with 14 percent in the previous survey, the ECB wrote.

"Moreover, the survey results point to somewhat higher rejection rates when applying for a loan (13 percent up from 10 percent)," it continued.

Meanwhile, the percentage of respondents reporting access to finance as their main problem remained "broadly unchanged," the survey found.

Publication Survey on the access to finance of small and medium-sized enterprises in the euro area, October 2011 to March 2012

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