Tag: credit

Small businesses welcomed yesterday's budget unveiled by UK Chancellor Alistair Darling, which lifts 345,000 firms in England out of the business rates system.

As the threat of sovereign debt default looms over Greece, the turmoil engulfing the euro zone is exacerbating the ongoing credit crunch for companies, according to BusinessEurope, a Brussels-based EU industry federation.

A new government agency will be established to ensure major Irish banks lend to small firms, in an effort to reboot business activity. The move comes as part of a tough budget, seen by observers as a step towards stabilising the Irish economy.

It should now be easier for enterprises, households and consumers to access funding, as fewer eurozone banks reported a tightening of credit standards in the third quarter of 2009, according to a bank lending survey carried out by the European Central Bank (ECB). However demand for loans by firms continued to decline, the survey found.

The European Commission is discussing harmonisation of national rules governing access to mortgages after the financial crisis exposed the excessive risks taken by credit institutions in the housing market. The downside of the possible measures, however, is that they widen the gap between the 'haves' and 'have nots'.

The European Investment Bank (EIB) may be dolling out billions of euros in loans to small businesses, but it has no intention of behaving like a commercial bank, Philippe de Fontaine Vive, EIB vice-president, told EurActiv France in an interview.

A third of small or mid-sized eurozone firms have been finding it harder to get loans since the start of the year, a new report from the European Central Bank and European Commission showed on Monday.

Europe should temporarily relax capital requirements for banks to ease lending activities and prevent a new fall after the recovery, Rodrigo Peduzzi, a top official at Italian industrial federation Confindustria, told EurActiv in an interview.

The European Central Bank's quarterly survey of bank lending, to be published tomorrow (29 July), will show that credit conditions are stabilising. But this assessment is at odds with complaints by businesses that bank credit is hard to get.

Companies in some European countries are beginning to see chinks of light but many others have been forced to lay off workers, sell assets and cut investments. EurActiv's network provides a snapshot of the situation across Europe.

SMEs seeking loans to keep them afloat are facing stricter conditions than earlier this year, with banks favouring larger firms, Erik Sonntag, advisor for entrepreneurship and SMEs at BusinessEurope, told EurActiv in an interview.

Concern over the apparent reluctance of banks to lend to businesses has prompted the Irish commerce minister to embark on a tour of the country to hold a series of meetings with banks.

Irish government departments will settle their bills within 15 days as part of a major effort to boost cash flow to businesses. Senior ministers have also unveiled a new Credit Supply Clearing Group responsible for ensuring that banks provide credit to viable companies.

Regional governments in the UK should channel European Investment Bank funds to SMEs to help small firms survive the onslaught of declining sales, late payments and the credit crunch, Richard Hyslop, EU and international affairs policy advisor at the Federation of Small Businesses, told EurActiv in an interview.

A combination of loans for SMEs, bank rescue schemes and the implementation of the updated Late Payments Directive could help reboot Europe's ailing economy, Philippe De Buck, director-general of BusinessEurope, told EurActiv in an interview.

A special €5 billion loan guarantee scheme to encourage banks to extend credit to small businesses has been proposed by the association representing European chambers of commerce. The fund would be administered by the European Investment Bank and could see up to €350 billion in loans allocated to SMEs.

Up to 200,000 corporate insolvencies are expected in Europe this year, according to the European Commission's SME envoy, Françoise Le Bail, who said the reluctance of banks to lend to SMEs will force thousands of viable companies out of business.

The European Commission is considering US-style rules to regulate credit rating agencies which were widely blamed for contributing to the subprime crisis in the US and the subsequent turmoil on financial markets and the world economy.

In a long-awaited decision, the Commission has opted against proposing a new directive to regulate mortgage credits for now, but is still seeking to increase competition and offers for consumers across member states.

Internal Market Commissioner McCreevy has warned member states that they will face enforcement consequences if financial services legislation is not promptly transposed.

The debate on whether to regulate mortgage credit in the EU is ongoing. In July 2005, the Commission published a green paper on mortgage credit which was followed by a public consultation.