Small businesses are starting to get the loans they need according to Bank of Spain data corresponding from the end of 2013. A 4.6% rebound in November blossomed to nearly 10% in December. In sum, 12.7 billion euros were pumped into the Spanish economy.
The figure instills hope even though we are still far away from pre-crisis levels when nearly 70 billion euros in business debt was being awarded every year. The year-end improvement will not be enough, however, to make up for an abysmal first three quarters when the banks, who are the sole loan source for small businesses, were more focused on cleaning up their balance sheets than handing out more debt. Now, the biggest problem for the banks is deciding what small businesses should get loans. And there are a lot, many of them unknown. Many of the businesses are former clients of extinct savings banks. And the banks do not have as much loan-granting leeway with smaller companies as they do with larger corporations. With high levels of loan default and continual stress tests, the banks want to see high solvency levels from companies before they dish out debt.
Still, as 2013 bank profits show, the banks will have to increase their margins in 2014 if they want to revitalize their traditional business model: lending money to small business. It is also possible that the European Central Bank (ECB) will decide to open up credit markets with some less-than-orthodox maneuvers such as charging the banks a fee based on their cash reserves. The changes are designed to get money into small business accounts in hopes that they can create jobs and help increase growth.
