Small and medium-sized enterprises They had three quarters in which they endured average interest rates well above 1.7%. in force in the years marked by the Covid-19 pandemic, which requires following the process that people who dare to move their business forward must follow.
Getting started in the business world represents an increasing challenge for those who wish to start a new business and realize the ideal of being their own boss. One of the main reasons is that SME financing has increased by three-quarters, triple that of before the Covid-19 pandemicthat is, before March 2020.
Specifically, The average interest rate faced by small and medium-sized enterprises in the first quarter of the year was 4.9%.after 5% in the fourth quarter of 2023 and 4.8% in the third quarter of the previous year, as revealed by the Cepyme indicator on the situation of companies in the first three months of 2024prepared by the Research Department of the Confederation of Enterprises.
The report also reveals that Companies with fewer than 250 employees have paid the most expensive financing since March 2009 (5.3%). Cepyme thus shows that average interest rates have accumulated three quarters, tripling the rates before the pandemic with 1.7%, and since the pandemic itself with 1.6%.
According to the document, in addition to the financial costs incurred, there is the accumulation of the sustained rebound in labor costs and the increase in tax and bureaucratic burdens that Spanish companies have to face.
Furthermore, Cepyme specifies, it is necessary to take into account high inflation, which reduces corporate margins and depresses investmentIn this sense, the employers’ association affirms that the situation is particularly difficult for small companies, which were financed at 5% in the first quarter of this year, compared to 4.8% for medium-sized companies.
As for the interest rate on outstanding loans, it has increased month by month for 26 consecutive months. During this period, it went from 1.6% to 4.4% (which is the maximum figure recorded since March 2009).
The credit restriction, for its part, is exposed by observing that, although the volume of new bank loans received by SMEs followed a slight upward trend, caused by the fact that they attracted new financing for 40.2 billion euros (eliminating the effect of inflation), this figure is lower than that of any quarter between 2015 and 2019.
New financing, meanwhile, fell by 14.8% for small businesses and 26.9% for medium-sized businesses, so that the average loan per small business fell from 28,500 euros at the beginning of 2017 to 24,300 today.
In the case of medium-sized companies, this figure fell from 443,500 euros to 324,300 euros in the same period. Although the drop in the Euribor allows a correction to be initiated in the gap between the index and the interest rates at which SMEs are financed, with these data, the study carried out by Cepyme calculates that the evolution will lead in the long term to , any further drop will not be fully reflected in the financing rates of this sector.
This is a situation that is difficult to correct today and reflects the risk perceived by banking entities in lending to small and medium-sized enterprises. However, several positive factors have occurred during the first quarter of 2024, such as slight decreases in operating costs and interest rates on new bank loans.
In addition to the weakness in sales, there is the increase in bankruptcy proceedings and the new drop in productivity, which makes the situation in which SMEs find themselves difficult and it is inevitable that banks take this into account. It may be paradoxical to talk about weak sales in the last four quarters, when they have been growing steadily at around 3%.
However, analyzing the evolution of sales using a four-quarter moving average, we see that this growth is the weakest since June 2021. And, adjusting nominal sales for inflation, the real increase in sales in the first quarter of 2024 is only 0.5%.
In 2024, sales of small businesses (3% year-on-year) exceeded those of medium-sized businesses (2.3%), the opposite of what happened in 2023. However, after the pandemic, only sales of medium-sized businesses decreased, while those of small businesses remain lower than in the first quarter of 2019. The decline in productivity has increased the cost of labor per unit sold, reducing the investment capacity of businesses.
Likewise, Spanish SMEs remain among the least profitable in the European Union, with a sales rate of 6.1%, just ahead of Italy and Croatia. Whether in terms of activity, sales, jobs and business creation as well as in terms of costs, medium-sized companies are evolving more optimally than small ones. This can be summed up by explaining that Sales of small businesses, measured in euros, are lower than five years ago, while those of medium-sized businesses have increased by almost 14%..
If we focus solely on employment, despite a high workload and low sales, employment has strengthened in SMEs in Spain in the first quarter of the year. Thus, the number of employees has increased by 2.7%, although this increase has not translated into an increase in hours worked, due to the increase in absenteeism that requires replacement hiring, which is more costly for SMEs than for large companies.
Thus, employment in medium-sized enterprises increased by 3.8%, reaching 2.72 million employees, and in small enterprises it increased by 2.2%, reaching 6.32 million workers. Applications for new loans from SMEs have been falling since the beginning of 2023. Similarly, the number of employees in SMEs increased by 2.7% over one year. This growth, higher than sales (0.5% over one year), reflects a continued decline in productivity.
The report states that stagnant sales and increasing number of employees contain a serious economic imbalance. The presented data demonstrate that the decline in average sales volumes per employee has been linked to this situation for six consecutive quarters. At the same time, in terms of competitiveness, only sales of medium-sized companies have recovered.
During this period also, The number of small businesses decreased by 6,000 compared to the first quarter of 2019. At the same time, the number of medium-sized businesses increased by 2,200 medium-sized businesses. In other words, there are 3,800 SMEs with fewer employees than five years ago, which makes us think about the situation in which this sector of businesses finds itself, which represents nearly 99.8% of the productive fabric with nearly 11 million jobs.
It should be noted that according to the report Spain Outlook 2024 conducted by KPMG in collaboration with CEOE, economic growth expectations remain positive, Spanish businessmen remain concerned about factors such as legal uncertainty (48%), political uncertainty (44%) and regulatory changes (30%)..
In the sector, it is estimated that nearly two million companies will need financing in 2023; andIn the case of SMEs, 54.2% requested financial support in the last yearThis panorama shows that small businesses, after four years, have still not fully recovered from the consequences of the crisis linked to the coronavirus pandemic.
