The interest rates required from SMEs register the largest year-on-year increase since 1995

The country's small and medium-sized companies have suffered in the first half of the year the largest year-on-year increase in interest rates since 1995, when the Mibor rate exceeded 10%, “so the increase, proportionally, was less than that is currently being suffered,” the Cepyme employers' association warned this Monday.

“There are now four consecutive quarters with year-on-year increases in interest rates, a fact that has not happened since 2012. However, the increase is now much stronger,” the organization led by Gerardo Cuerva stated in its Cepyme Indicator report published this Monday.

Of all the factors that determine the activity of companies, financing costs are one of those that are having the most negative impact. “The conditions of new loans became more demanding for the fifth consecutive quarter, something that has not happened since 2013,” which means that companies are asked for more guarantees and interest rates are raised.

“The average interest rate on new bank loans to SMEs has almost tripled in the last twelve months: if in the second quarter of 2022 they were 1.62%, now they reach 4.45%, which is the highest rate of the last ten years”, they point out, while warning that the interest rates on new loans requested by SMEs will continue to grow even more, given the lower risk tolerance declared by banking entities.. The increase, in any case, does not only affect new loans, but the interest rates on outstanding credit have risen from 1.65% at the end of 2021 to 3.82% in June of this year.

The tightening of financing conditions, together with inflation and the weakening of demand, has caused a drop in the percentage of SMEs that pay within 30 days, although it remains high: at 88.3%.

Another indicator that has worsened is that of the financial effort, understood as the debt of companies (the average liability) for the average interest rate, which has tripled in the second quarter of the year, going from 7,900 to 22,400 euros in the case for small companies, and from 173,900 to 567,400 euros in the case of large companies.

Sales resist

Despite the difficulties, SME sales grew by 9.7% year-on-year between April and June, although this increase remains at 0.7% once the distorting effect of inflation has been eliminated – the increase in turnover is not not because they sell much more in volume, but because they sell more expensively.. For the third consecutive quarter, sales grew in real terms by less than 1%, compared to the 3.7% advances recorded in 2019.

Employment also grew in the second quarter and SMEs exceeded 9 million members for the first time, 2.7% more year-on-year, with greater employment dynamism in medium-sized companies (3.8%) than in small ones (2 ,2%). “The fact that employment has grown at the same time as or above sales leads to poor productivity performance (understood in this case as sales volume per employee),” they point out.

The set of vicissitudes that companies have to face has caused Spain to today have 9,000 fewer small and medium-sized companies than before the pandemic, 0.7% less, since the loss of productive fabric that occurred due to the stoppage of activity in 2020, it has not yet fully recovered in this segment.

In the second quarter of this year, the number of SMEs has grown by 0.4%, which represents a slowdown compared to the average growth of 1% recorded in the 2015-2019 period.

It must be taken into account that this rebound “hides a disparate behavior between small and medium-sized companies,” says the organization chaired by Gerardo Cuerva, since while small companies increased by 0.3% year-on-year, medium-sized companies increased by 3%. ,4%.

“There have been four quarters in which the number of small businesses has grown less than 1%, a situation that, excluding the period of the health emergency, has not occurred since 2014. Special mention deserves the situation of companies with up to two employees, whose number in June had twelve consecutive months of year-on-year falls (-0.7% in the second quarter), with their fall worsening at the start of the third quarter, in line with a context of high costs and a complex regulatory environment that works against the survival of smaller business projects,” they explain.