While GDP is back in positive territory and industrial production is up, according to Eurostat, small firms complain that banks remain over cautious.
The issue has crept steadily up the political agenda, not least because bank bailouts mean governments have nationalised, or taken a stake in, several financial institutions. Banks, keen to restore order to their balance sheets, have been resisting pressure to lend for political rather than commercial reasons.
Governments have appointed "public interest" directors to the boards of state-supported banks and appointed appeals bodies to referee disputes between lenders and companies who believe they have been unfairly refused access to finance.
UK
In the UK, where economic issues have dominated the election debate, getting credit to small businesses has been a feature of party manifestos.
Gordon Brown's incumbent Labour Party is promising a £4 billion Growth Capital Fund, which will provide capital injections of between £2 million and £10 million for small firms. Labour also promises to create a new Small Business Credit Adjudicator with statutory powers, ensuring that SMEs are not turned down unfairly when applying to banks for finance.
The Conservative Party, led by David Cameron, makes the availability of credit one of its "benchmarks for Britain". They want more diverse sources of affordable credit for small buisneses, and are proposing a loan guarantee scheme.
Nick Clegg's Liberal Democrats promise to break up banks and build up diverse local and regional sources of business finance, as part of a plan to ensure the economy is "never again destabilised by high-risk financial industries".
The Federation of Small Businesses (FSB) has launched its own election policy wish-list, urging politicians to prioritise access to finance in order to sustain the recovery. The cost of loans and overdrafts remains too high, says the FSB, and it wants more competition in the marketplace through the establishment of a Post Bank and better use of state-owned banks.
"The future health of our economy depends on restoring the trust of small businesses in the banks. Promoting and emboldening the Financial Intermediary Service would help," says the business organisation.
Germany
In Germany, the government has appointed an SME credit mediator, Hans-Joachim Metternich, to help small firms get credit during the economic crisis. He says that although figures from the German government show there is no nationwide credit crunch, firms could still be facing liquidity problems in the near future.
The overall volume loans granted has been shrinking in recent months, according to Metternich.
"It's too soon to say whether this is mainly due to the economic crisis and postponed investment activities or signals that companies are increasingly having problems getting money despite an increase in orders received. However, SMEs in particular are already suffering from tougher credit criteria put in place by financial institutions," he said.
He said the role of the credit mediator will pool expert knowledge to ensure that all public support schemes are adequately considered.
The KfW Banking Group, a public bank which grants credit to SMEs, said the credit problems have not yet passed.
"In our view, such a danger is not averted. Due to the crisis the internal financing abilities of companies are limited. When the economy revives, as expected, increasingly more capital is needed," the bank said.
When the crisis first broke, large German companies were feeling the pinch, but now it is mainly small businesses that have difficulty getting credit. KfW says export industries have been hit by worsening conditions.
France
In France, small companies struggled to access credit in the months after the crisis hit Europe, but the situation has slowly improved (EurActiv 22/07/09).
The results of a bank lending survey in relation to credit data, published in January 2010 by the Banque de France, revealed that banks' conditions for credit in France were slightly more flexible in the last quarter of 2009, particularly for SMEs.
The current slowdown in lending in France seems to be due to a combination of a tightening of credit supply and a fall in demand. The European Investment Bank (EIB) has earmarked €30 billion for SMEs between 2008 and 2011 and last year already granted €13 billion.
Of this, €950 million was distributed to French companies through commercial banks. Crédit Coopératif lent €150 million for SME projects. Banque Fédérale des Banques Populaires provided loans of €100 million. BNP Paribas provided credit worth €400 million, while Crédit Agricole gave loans of €300 million for small businesses.
Slovakia
While the Slovak banking system was relatively healthy when the credit crunch struck, the Slovak government decided to strengthen access to finance for entrepreneurs as a part of its anti-crisis measures.
Almost €33 million has been provided to increase the capital base of the Slovak Guarantee and Development Bank (Slovenská Záručná a Rozvojová banka; SZRB), which provides specialist support for SMEs.
In addition, the EIB approved a credit line of €50 million to the SZRB, which will be used to support SMEs investing in several sectors, especially industry and services. A further €11.5 million has been made available to Eximbank, to strengthen loans to exporting SMEs, and €5 million has been earmarked to support between 500 and 750 entrepreneurs through a 'micro loan' programme.
The National Bank of Slovakia (Národná banka Slovenska; NBS) in its response to the financial crisis decided to tighten liquidity requirements for banks. During the last quarter of 2008 and at the beginning of 2009, a decrease in lending, especially of working capital, was recorded.
In January 2009 the stagnation of new operating loans and a decrease in new investment loans were recorded due to low demand, resulting from unpredictable economic developments and stricter credit conditions faced by banks.
"The behaviour of the banks was and still is very cautious. When they expect a possible worsening of the economic and financial situation for Slovak firms, they tighten credit standards to avoid credit defaults," Jozef Hudák, director of the Business Environment Department at the Ministry of the Economy says.
He also stressed that negative market conditions have arisen due to economic development and entrepreneurs' reluctance to run up debts during a time of uncertainty.
In Slovakia, the volume of enterprise and household loans began to rise in the second half of last year, but fell again in the final quarter of 2009.
Similar trends were recorded in January 2010, when lending fell compared to a month-on-month and year-on-year basis. The volume of operating loans was still declining, but the volume of investing loans and property loans was increasing.
"In 2009 the overall loan volume of lending for SMEs decreased, because firms were cancelling or postponing their investment plans due to recession and that led to lower investment loan demand. On the other hand we recorded an increase in the field of operating financing, especially in overdrafts. Enterprises used these loans to compensate for late payments from their customers and business partners," Alena Walterová, spokesperson for VÚB bank, a member of Intesa Sanpaolo Group, told EurActiv.sk.
Czech Republic
Almost half of Czech companies (46%) claim that their access to finance has worsened since six months ago, the latest survey from the Czech Chamber of Commerce (CCC) revealed.
"In June 2009 it was 55% of companies, which means that the situation is still deteriorating although not as quickly as six months ago," CCC President Petr Kužel states. "Therefore we started talks with domestic banks again," he adds.
On the contrary, 27% of survey participants reported better access to bank loans, while 16% have not observed any changes (the rest answered 'I don't know'). According to 62% of companies, banks are more demanding when discussing loan terms.
"The CCC survey has shown nothing new. This topic is debated all the time. Companies complain about access to credit even in an economic boom," said Karel Havlíček, vice-chairman of the Czech Association of Small and Medium-Sized Enterprises. "Of course, the banks are more vigilant in times of crisis," he added.
Havlíček complained that nowadays banks usually demand as much as 40% participation by firms in an investment (banks are not willing to cover more than 60% of the investment costs with loans).
Havlíček doubts that talks with the banks (led by the CCC) will yield any results. "Banks manage their risks on the base of internal guidelines usually set by their foreign owners," he explains.
Ireland
The Irish government has nationalised the troubled Anglo Irish Bank and recapitalised Bank of Ireland and Allied Irish Bank, but SMEs continue to complain about access to credit. A Credit Review Office has also been established and can intervene where viable businesses are denied access to credit.
A survey by accounting firm Mazars shows one in five small businesses are not getting enough credit, despite a commitment by the country's two biggest banks – BOI and AIB – to make €3 billion available in loans.
The Small Firms Association wants to see direct government intervention to force banks to lend. SFA Director Patricia Callan said the Mazars survey echoes the Association's own research, which shows a decrease in the availability of working capital. The cost of finance is also increasing, according to a sizeable proportion of SMEs.
"The recently established Credit Review Office is critical to establishing whether the bank refusal rate is reasonable or otherwise, and should make the next Mazars report more useful in its commentary," Callan said.
She said small businesses are failing not because they have run out of customers, ideas or products, but because they have run out of money.
Poland
Krzysztof Pietraszkiewicz, head of the Polish Banking Association said banks have stopped tightening criteria for accessing loans for companies and are planning to further develop activities.
"It's still less than the market is expecting. The increase of the supply of external resources for enterprises depends on suitable forms of cooperation and public aid," he said.
BPH, a large Polish bank, has launched a new credit plan. It is the first financial institution in Poland to benefit from guarantees from the European Investment Fund (EIF). The bank has launched new financial instruments for SMEs designed to boost entrepreneurship.
The entrepreneurs may use three kinds of credits with the CIP guarantee: “Simple Investment Credit”, “Standard Investment Credit” and a car credit “Auto Sezam”. Through the EU guarantee the requirements on the amount of the deposit and the collateral were simplified.
Romania
Access to finance has not improved in recent months in Romania, entrepreneurs say. The situation is similar both for bank loans and for EU funding opportunities.
Several businesspeople from the National Council for SMEs in Romania, a professional association, told EurActiv.ro that there is no change in the banks' attitude. "The banks are not open to providing loans for SMEs," they said. The entrepreneurs think that the government should help companies to get loans and find a solution together with the banks.
"Even if the situation on the market has calmed down and the Central Bank offered a strong signal by reducing the interest rate from 10.25% to 6.5% in only a few months, the banks are moving slowly and are still not rushing to provide facilities for SMEs' financing," said Alexandra Popa of financial news portal Conso.ro.
"Besides a small decrease in interest rates and two new loan products, the SMEs affected by the economic crisis have little chance of finding finance opportunities. The commercial banks that provide some loans use mostly EBRD [European Bank for Reconstruction and Development] and EIB financing targeting priority economic areas. Still, the state-owned banks claim to be focusing on companies in 2010," said the Conso.ro expert.
Popa noted that banks prefer to attract clients by offering promotions and reducing fees for current accounts. "Smaller fees, free management, cheaper transactions: all of these are part of the banks' strategy to attract companies' savings," she said.
The situation is bleak for SMEs that wish to access EU funds. Those who submit projects to the authorities must wait for 6-7 months, in some cases, to find out if they were selected for finance. Then, if they manage to find the financial resources to start their projects, they wait a further one or two months for payment.
The Ministry of Finance and the Managing Authorities for structural funds have started to meet regularly to find solutions for giving loans to entrepreneurs that were selected in European programmes. But it seems that no solution will be found for a few months at least.
Another communication initiative is expected from the banks and targets entrepreneurs: the president of the national bankers' association, Radu Ghetea, promised recently at a public conference to publish a list of principles and conditions that banks must follow when analysing a loan request.
