Sonntag said companies are now finding it harder to secure loans than earlier this year, even though interest rates have fallen, making the cost of credit cheaper.
"We've seen an improvement when it comes to cost of financing – in terms of interest rates. However, access to credit has become even worse, especially for SMEs, compared to earlier this year. Conditions are now stricter, negotiations are taking longer, and the amounts being loaned are smaller," he said.
He also warned that larger companies may be "crowding out" SMEs, as banks see big business as a safer bet in troubled times.
"Due to the whole financial crisis, larger companies might be thinking they can't go to the capital markets so they are going to banks. If you are a bank and you have a larger company and a small company asking for credit, you will probably hand the money to the larger one if you perceive it as less risky," Sonntag said.
EIB
However, action by the European Investment Bank – which is pumping billions of euros into the system for SMEs – has the potential to increase the flow of credit, particularly as the Bank moves towards risk-sharing rather than simply lending money to commercial financial institutions.
"The EIB handed out bigger amounts of cash, bigger envelopes, but sometimes these loans are not very attractive. The EIB works with commercial partner banks – the EIB does not grant the credit itself – so the risk essentially remains with the commercial bank."
Sonntag said that even when commercial banks get finance at lower interest rates from the EIB, they are still not inclined to lend if they must bear the risk of customer default.
"That's why we have been in constant contact with the EIB, with whom we have good relations, suggesting that developing risk-sharing facilities would be helpful."
He also suggested swift implementation of the Small Business Act would be "a whole recovery plan on its own," as cutting red tape and addressing the problem of late payments would reduce costs and increase the bank balances of SMEs.
Recovery
Discussing the prospects of economic recovery, Sonntag said the decisions taken by policymakers today would have a major impact on the medium-term outlook for European economies. He said cutting investments in R&D and slashing staff numbers could lead to a long period of stagnation, similar to that experienced by Japan following its economic crisis.
"If you cut innovation spending it hampers your growth in five to ten years' time, and you follow what happened to Japan."
"It's important this period is not wasted and that start-ups are not hampered too much. There is a debate going on right now about whether too much is being done to protect old and obsolete industries while neglecting more dynamic new businesses that could begin the next industrial revolution," he said.
Asked whether a 'V-shaped' recovery might be in the offing if appropriate measures are taken, Sonntag was less hopeful than earlier in the year. He said forecasts published previously now look optimistic. "We are looking at more of an 'L-shaped' curve," he said.
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