More than one in five European small- and medium-sized enterprises (SME) have reported a worsening in bank loan availability, according to new data which reveals a building trend that may push more to list on equity markets to raise funds.
Access to bank loans has continued to deteriorate, with firms reporting the availability of debt finance had dropped to -22% compared with -20% in the previous survey, as SMEs may increasingly look at equity markets for financing with a slew of new opportunities tailored to smaller businesses.
Rejection rates for loan applications climbed to 15% from 13% and results showed businesses were looking to support less of their operations with external finance, with 8%, up from 5% on the previous survey. The poor macroeconomic outlook for the region has reduced the likelihood a loan would be granted.
The report, published by the European Central Bank, focuses on the financial situation and access to finance of SMEs in the euro area. Conducted between 3 September and 11 October, 7,514 firms responded as part of a six-monthly refresher survey between a rolling two-yearly survey conducted by the European Commission.
The percentage of respondents reporting access to finance as their main problem also crept slightly to 18% from 17% earlier this year.
European SMEs may be buoyed by news last week that NYSE Euronext-backed SME venue, the Entrepreneurial Exchange, may open before June next year. The pan-European venue is designed to facilitate capital raising by smaller companies away from venues dominated by blue-chip listings. It would operate according to NYSE Euronext’s federated model in all countries the exchange operator has a market, which comprises France, Belgium, the Netherlands and Portugal.
Also, inter-dealer broker ICAP last week launched a new listing venue for SMEs after buying and rebranding PLUS Markets' stock exchange earlier this year, while the London Stock Exchange is also believed to weighing up a variety of options to improve equity raising opportunities for SMEs.