Euro area firms reported further increases in bank loan interest rates in the third quarter, with a net 46% reporting rises, up from 42%, the European Central Bank said.
The increase was more widespread among large companies, while fewer small and medium-sized businesses reported higher rates. The central bank published “Survey on the Access to Finance of Enterprises: lending conditions tightened” on Oct. 26.
The survey found that a net 55% of large firms reported higher loan rates, up from 41% in the previous quarter. Among small and medium-sized enterprises, the balance fell to 38% from 43%.
Net percentages measure the share reporting an increase minus the share reporting a decrease. They do not measure how much interest rates changed.
The central bank found that loan availability declined more than companies’ borrowing needs. A net 5% reported lower availability, compared with 1% in the second quarter, while a net 2% reported lower borrowing needs.
Its financing gap indicator, which measures changes in borrowing needs against loan availability, remained positive at 2%, down from 3%. The positive reading indicated a widening gap, the central bank said.
The survey found lower loan availability across company sizes. A net 6% of large firms reported a decline, reversing a net 4% reporting an increase previously. Among smaller businesses, a net 5% reported lower availability, compared with 4% previously.
Other borrowing terms also tightened, the central bank said. A net 27% reported higher charges, fees and commissions, down from 31%, while a net 14% reported increased collateral requirements, up from 10%.
The central bank found that companies continued to see the economic outlook as the biggest constraint on access to outside financing. A net 31% reported a negative effect, up from 29%.
More companies expected access to outside financing to decline over the next three months, the survey found. Businesses continued to see their capital position and creditworthiness as helping their access to funds.
The central bank said changes in the sample made responses to numerical questions difficult to interpret because most participants were first-time respondents. Selling price expectations rose markedly across the full sample, but the increase was limited among repeat participants.
Median inflation expectations also rose markedly in the full sample but barely changed among repeat participants, the central bank said. Companies’ assessment of risks to their five-year inflation outlook changed little.
The central bank surveyed 12,822 businesses between Aug. 26 and Oct. 2, including 11,917 with fewer than 250 employees. About half answered questions about July through September, while the remainder covered April through September, giving respondents different periods to assess.
