ECB survey: euro area firms report tighter credit as rate pain spreads

• 2026-10-27
• Economy
• News Desk
• Source: European Central Bank https://www.ecb.europa.eu//stats/ecb_surveys/safe/html/ecb.safe202610.en.html

Bank financing conditions for euro area companies tightened further in the third quarter of 2026, with a net 46% of firms reporting higher bank loan interest rates, up from 42% in the previous quarter, according to the European Central Bank's Survey on the Access to Finance of Enterprises (SAFE) published on the basis of interviews conducted between 26 August and 2 October 2026. The survey, the 40th round of the exercise, covered 12,822 enterprises across the currency bloc, of which 11,917 — 93% — employed fewer than 250 people.

Key facts

How did interest rates move?

• The ECB's 40th SAFE survey questioned 12,822 euro area enterprises between 26 August and 2 October 2026, including 11,917 firms with fewer than 250 employees.
• A net 46% of firms reported higher bank loan interest rates in the third quarter of 2026, compared with 42% in the previous quarter.
• A net 5% of firms reported a decline in bank loan availability, after -1% in the previous quarter, while a net 2% reported falling demand for bank loans.
• A net 31% of firms said the worsening general economic outlook had hurt the availability of external financing, up from 29% in the second quarter of 2026.
• Only 22% of firms applied for bank loans in the third quarter, down from 23%, and 7% of those for whom loans were relevant faced obstacles, up from 5%.

Firms widely reported a further net tightening in bank loan interest rates, and the ECB said the increase was more often reported by large companies than by smaller ones. A net 55% of large firms reported higher rates, up from 41% in the previous round, while the reading for small and medium-sized enterprises came in at a net 38%, after 43%. Beyond interest rates, companies also faced higher non-interest borrowing costs in net terms, though to a smaller extent than in the previous survey round.

The ECB's indicator of overall bank financing conditions, which captures perceptions of price-related terms such as interest rates, charges, fees and commissions, pointed to a further tightening. The central bank said the tightening was similar for SMEs and large firms. It cautioned that the ongoing substantial change in the sample composition, with first-time respondents making up the majority in this round, makes the numerical answers difficult to interpret at this stage. Is it getting harder to borrow?

Bank loan availability declined by more than firms' needs, pushing up the financing gap. A net 5% of companies reported a fall in the availability of bank loans, after -1% in the previous quarter, while a net 2% reported decreasing demand for loans, compared with a net 2% increase in the second quarter. The decline in availability was similar across size classes, with SMEs at -5% after -4% and large firms at -6% after 4%. SMEs reported broadly unchanged borrowing needs, while large firms signalled a decrease.

The euro area bank loan financing gap indicator, an index capturing the difference between changes in needs and availability, remained positive for a net 2% of firms, compared with a net 3% in the previous quarter. Looking ahead, more companies expect the availability of external financing to fall over the next three months than in the previous round. What is holding firms back?

Companies continued to identify the general economic outlook as the main constraint on the availability of external financing. In the third quarter of 2026, a net 31% of firms said the worsening economic outlook had negatively affected access to financing, up from a net 29% in the second quarter of 2026. Firms used financing from external and internal sources mainly for inventories, working capital and fixed investment: 38% cited inventories and working capital, down from 40%, while fixed investment was also named by 38%, after 37%.

On the supply side, firms continued to report a moderate improvement in banks' willingness to lend and in trade credit. On balance, 5% of firms reported an improvement in banks' willingness to lend, compared with 6% previously, an improvement largely driven by banks' more favourable attitude towards large firms. A net 4% reported an increase in suppliers' willingness to offer trade credit, up from 2%. SMEs perceived an improvement in their trading partners' readiness to provide credit, while large firms signalled broadly no change. How many firms are actually applying?

The share of firms applying for bank loans remained broadly unchanged at 22%, compared with 23% in the previous round. The most common reason for not applying was sufficient internal funds, cited by 50% of firms. Among companies that considered bank loans relevant to their business, 7% faced obstacles when seeking a loan, up from 5% in the previous quarter — a share that increased slightly but remained low.

Firms also reported an increase in turnover, with notable differences between size classes: on balance, 4% of companies indicated higher turnover, compared with 9% in the previous quarter. The survey results feed into the ECB's monitoring of financing conditions across the single market as it assesses the transmission of its monetary policy to companies in all member states of the currency bloc. The next round of the survey is due to follow the same quarterly cycle, with the ECB publishing updated results in its regular SAFE release.

Source: European Central Bank