The fourth European Credit Risk Survey shows that the gap between credit availability and demand from small businesses is still widening, with 71% of bankers questioned expecting firms to face a credit gap. Commissioned by Fico and undertaken in January and February by the European Financial Marketing Association (Efma), the survey gathered feedback from more than 100 bank risk managers across 79 institutions and 31 European countries.
The banks blamed the credit crunch on regulators with 78% of those questioned saying banking regulations were the reason why credit availability is tightening. In the UK and Ireland this figure was 91%. Other finding include 31% of respondents believing the aggregate amount of credit requested by small businesses will increase, while just 13% say the amount of credit extended will increase.
“The survey results show that credit demand across Europe will shrink, but supply will shrink even faster, particularly for small businesses,” said Mike Gordon, Fico vice president for Europe, Middle East and Africa (EMEA). “It’s notable that in the UK, which has had a tremendous focus on small business lending through such efforts as Project Merlin, our survey says the increases in demand and supply will be roughly equal, and half as many respondents, just 36%, say small businesses will find it harder to get credit.”
The banks did not, of course, hit their lending targets on the government lead Project Merlin, but it seems the effort may have alleviated the worst of a credit crunch. The detailed report, including sections on the UK, Germany/Austria/Switzerland and Spain/Portugal, is available online.
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