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ECB Survey: Small Firms Continue To Face Difficult Financing Conditions

Small and medium-sized enterprises in the euro area are experiencing a greater need for funds, but are finding it difficult to access them, results of a survey by the European Central Bank revealed on Thursday.

In its ninth report on the results of the "Survey on the access to finance of SMEs in the euro area", the ECB said finding customers and access to finance dominated the worries of the smaller firms between April and September. The firms also reported a "marginal deterioration in the availability of bank loans", the bank said.

"The net percentage of euro area SMEs reporting a deterioration in the availability of bank loans increased marginally (-11 percent, after -10 percent)," the survey report said.

Further, the rejection rates for euro area SMEs when seeking a loan rose to 12 percent from 11 percent. Small firms also reported an increase in interest rates offered to them.

"The survey results suggest that financing conditions for SMEs continue to differ significantly across euro area countries and are in general more difficult than those of larger companies," the ECB said.

Meanwhile, the percentage of SMEs reporting access to finance as their main problem remained broadly stable, at 16 percent.

Yesterday, ECB Executive Board Member Yves Mersch said SMEs are highly dependent on bank financing even as access to that source is declining, hampering growth and opportunities of those firms. "Ensuring access to finance for SMEs must therefore be a central tenet of achieving a sustainable recovery," the policymaker said.

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