Brussels, 19/04/2012 (Agence Europe) - According to the latest figures from the OECD, small businesses have been hit harder than large companies by the credit crunch that started in 2007.
Published on 19 April 2012, an OECD report on funding for small businesses and entrepreneurship highlights the difference in treatment between small businesses and large when it came to bank lending from 2007 to 2010. Small businesses were charged much higher interest rates. In addition, small companies had to pay back their loans faster than large businesses and much higher collateral was demanded of them.
While the interest rates on loans to small businesses tended to fall during the financial crisis, the gap between small business interest rates and those charged by banks to large businesses grew even wider, even during the upturn of 2010. The OECD says that the more favourable loan conditions for big businesses suggests that small businesses are seen as more risky and with lower prospects of success. Small businesses, however, account for more than 90% of companies in some countries and act as a driver of economic growth, job creation and social cohesion, states the OECD, pointing out that getting hold of bank loans is one of the biggest problems faced by small businesses throughout their lives. The European Commission is constantly pointing this out.
Looking at figures from 17 developed countries - Canada, Chile, South Korea, New Zealand, Switzerland, the United States, Denmark, Finland, France, Hungary, Italy, the Netherlands, Portugal, Sweden, Slovakia, Slovenia and the United Kingdom, plus Thailand - the OECD report shows that business lending to small businesses fell sharply during the recession and despite a slight rise in 2010, it has not returned to 2007 levels. Risk capital and expansion capital have also seen a sharp decline during the period under study. (EH/transl.fl)