Loan lifeline to eurozone business opens up: ECB survey

22nd October 2010, Comments 0 comments

The flow of lending to small and medium businesses has speeded up, a survey from the European Central Bank (ECB) showed on Friday, in a welcome signal that the fuel line of funding is opening up.

Credit is the lifeblood of global economies, and will be crucial to forecast eurozone growth of 1.7 percent this year.

The poll suggested that in the third quarter the 16-nation economic recovery was getting support from bank credits, although an ECB survey in late September suggested that softer demand might still be holding back lending to businesses.

Referring to small and medium enterprises, the ECB said that "the overall financial situation of SMEs has generally improved at the euro area level during the period from March to September 2010."

The latest survey covered 5,312 firms.

The proportion of SMEs which reported it was harder to get bank loans fell by almost half to 24 percent from 42 percent in the previous survey.

Meanwhile, 12 percent of the companies said they were finding it easier to get loans, a slight increase from the previous finding of 10 percent.

Companies said the factors which had an impact on credit availability had improved, "especially those concerning the economic outlook.

"SMEs reported broadly unchanged needs for external financing between March and September," while large companies said most of their loan applications were accepted and the financial situation "showed clear signs of improvement."

The ECB said last month that overall private sector lending had picked up in August, but that lending to companies fell by 1.1 percent following a drop of 1.4 percent in July.

© 2010 AFP

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