ECB survey: Bank lending in Greece is an uphill battle – One in five applications rejected

Small and Medium Enterprises in Greece are in a difficult position in relation to bank lending, according to a survey by the European Central Bank.

Although the liquidity of Greek banks has improved significantly, the lending conditions of Greek SMEs are among the worst in the Eurozone.

According to the research, 22% of loan applications submitted by SMEs in Greece are rejected, while this percentage in the EU is only 8%.

On the other hand, the data of the Bank of Greece show that Greek banks have received from the ECB subsidized liquidity of about 44.5 billion euros and deposits from the outbreak of the pandemic have increased by about 14 billion euros.

According to the ECB survey in the second half of 2020, in the EU on average 12% of companies said they needed more loans. In Greece, the percentage of companies that would like more loans reaches 33% (from 38% in the first half of 2021) and is by far the highest in the EU. Next are Portuguese companies with 27%. Approximately the same rates apply to lending lines where 21% of Greek SMEs would like broader lines, compared to 10% which is the EU average.

In the EU but also in Greece, only 3% of companies stated that the availability of bank loans has improved. In fact, regarding the financing lines, 5% in Greece answered that the situation has worsened. As a result, Greece has the highest financing gap (ie, the difference between the demand for new loans and their supply by banks) which stands at 14% when in the EU the average is only 4%. The result is rejections by the banks of loan requests by SMEs. Greece has the highest rate of rejection of requests reaching 22% when the EU average is only 8%.

According to the survey, 50% of SMEs reported receiving government support to alleviate their wage bill, 25% benefited from tax breaks, and 32% received other types of government support. Most of them said that these measures helped them to fulfill their immediate and short-term obligations, while about 50% believed that these measures would increase their ability to meet their obligations in the next two years.