ECB Survey Finds Bank Lending Conditions Tightened for Euro Area Firms

The European Central Bank said on 26 October 2026 that euro area firms reported a further net tightening of bank loan interest rates and other lending conditions in the third quarter of 2026, with bank loan availability declining by more than financing needs, according to the results of the 40th round of the Survey on the Access to Finance of Enterprises (SAFE).

A net 46% of firms reported higher bank loan interest rates, up from 42% in the previous quarter. Large firms reported increases more often, at a net 55% up from 41%, than small and medium-sized enterprises (SMEs), at a net 38% down from 43%. A net 27% of firms reported increases in other financing costs such as charges, fees and commissions, down from 31% in the previous quarter, while a net 14% reported stricter collateral requirements, up from 10%.

The ECB’s indicator of price terms and conditions pointed to a further tightening, similar for SMEs and large firms, according to the full report published alongside the release. The measure is derived from a factor analysis covering changes in interest rates and other costs of bank loans, collateral requirements, firms’ financial position in terms of profits, credit history and own capital, and firms’ perceptions of banks’ willingness to provide credit, with the resulting combination rescaled to a range of -100 to 100. For the subsample of firms reporting over the past six months, the net share indicating rising interest rates surged to 42% from 25%, while the share reporting higher additional financing costs was 36%, after 35% in the previous six-month period.

Availability, Needs and the Financing Gap

Firms reported a net 5% decrease in the availability of bank loans in the third quarter of 2026, after a net 1% decrease in the second quarter, with both SMEs (net -5%, after -4%) and large firms (net -6%, after 4%) reporting lower availability. At the same time, a net 2% of firms reported a decrease in their bank loan needs, after a net 2% reported an increase in the previous quarter. SMEs indicated broadly unchanged needs (net 1%, after 2%), while large firms reported a decrease (net -6%, down from 3%).

As a result, the bank loan financing gap indicator, which captures the difference between changes in needs and availability at firm level, remained positive at a net 2% of firms, compared with a net 3% in the previous quarter. Across size classes, the gap stood at a net 5% for SMEs, the same reading as in the previous quarter, and was broadly unchanged for large firms at a net -1%, after 1%.

Other instruments showed similar pressure. A net 11% of firms reported an increased need for credit lines, unchanged from the previous quarter, while credit line availability decreased at a net -4%, after -3%. Trade credit needs rose at a net 12%, after 14%, with availability broadly unchanged at 1%, after 4%. The composite financing gap indicator, which spans bank loans, credit lines, trade credit, debt securities and equity, was positive at a net 2% over the past six months, after a net 3%, with SMEs at a net 3% and large firms at a net -1%.

Applications, Obstacles and Constraining Factors

In the third quarter, 22% of firms applied for bank loans, compared with 23% in the previous quarter, with 18% of SMEs applying against 29% of large firms. Discouraged borrowers, meaning firms that needed a loan but did not apply for fear of rejection, accounted for 4% of firms. The main reason cited for not applying was sufficient internal funds, reported by 50% of firms, up from 45%.

Among firms that considered bank loans relevant to their business, 7% faced obstacles when seeking a loan, up from 5% in the previous quarter, a category that combines rejected applications, offers declined because borrowing costs were too high, discouraged borrowers and applications for which only a limited amount was granted. SME discouragement stood at 5%, against 3% for large firms. On balance, 5% of firms reported an improvement in banks’ willingness to lend, after 6%, driven by large firms at a net 10%, after 12%, while SMEs reported a net 3%, after 2%. Firms also reported a net 4% improvement in suppliers’ willingness to provide trade credit, after 2%.

Firms continued to cite the general economic outlook as the main factor constraining the availability of external financing, at a net 31%, after 29% in the previous round. Large firms, at a net 35%, were more pessimistic than SMEs, at a net 29%, a divergence from previous quarters when large firms had been more optimistic. A net 9% of firms said their firm-specific outlook in terms of sales and profits had a negative impact, after 10%, while the impact of their own capital (net 6%, after 7%) and creditworthiness (net 7%, after 10%) remained positive.

Looking ahead, a net 8% of firms expect bank loan availability to deteriorate over the next three months, after a net -2% in the previous quarter. A net 4% foresee lower credit line availability, after -3%, and trade credit availability is expected at a net -2%, unchanged.

Turnover, Costs and Country Detail

A net 4% of firms reported higher turnover, after 9%, with large firms at a net 13%, after 20%, and SMEs at a net -1%, after 3%. A net 27% of firms expect higher turnover over the next quarter, including a net 24% of SMEs and a net 31% of large firms. A net 21% of firms reported declining profits, after 16%. Cost pressures remained elevated: a net 71% of firms reported higher material and energy costs, after 77%, and a net 57% reported higher labour costs, after 59%. A net 17% of firms reported higher interest expenses, after 16%, with large firms at 20% and SMEs at 15%.

The share of financially vulnerable firms, those simultaneously reporting lower turnover, decreasing profits, higher interest expenses and a higher or unchanged debt-to-assets ratio, held at 4%, with 5% of large firms classified as vulnerable against 3% of SMEs. Financially resilient firms also stood at 4%. A net 8% of firms reported higher fixed investment, after 6%, and a net 11% expect to increase investment in the fourth quarter of 2026.

Production and labour costs (63% of firms) and the availability of skilled labour (61%) remained the most widely reported major concerns, followed by finding customers (52%) and competition (43%). Access to finance was cited by 26% of firms, including 29% of large firms and 24% of SMEs. By country, bank loan availability fell at a net 18% in both Germany, after -9%, and France, after -5%. Financing obstacles reached 12% in Germany and Austria, and financially vulnerable firms reached 12% in France, after 7%.

Sample Change and Inflation Expectations

First-time respondents accounted for the majority of the sample in this round, which the ECB said makes the responses to numerical questions, such as those on expectations for selling prices, input costs and inflation, challenging to interpret at this stage. The report therefore also published results for firms that took part in both the second and third quarter rounds.

Among those repeat respondents, selling prices are expected to rise on average by 3.6% over the next 12 months, after 2.5%, whereas the full sample points to an average increase of 7.1%, after 3.2%. Wage expectations among repeat respondents stood at 2.7% on average, after 2.4%, against 4.7% for the full sample, after 2.5%. For repeat respondents, the median one-year-ahead inflation expectation held at 3.0%, while the three-year median moved to 3.2% from 3.1% and the five-year median to 3.1% from 3.0%. In the full sample, the one-year median rose to 4.0% from 3.0%, and the three-year and five-year medians both rose to 5.2%, from 3.0% and 3.1% respectively. On risks, 65% of firms perceived upside risks to their five-year inflation outlook, 25% saw balanced risks, down from 26%, and 9% saw downside risks, unchanged.

The survey was conducted between 26 August and 2 October 2026 and covered 12,822 euro area enterprises, of which 11,917, or 93%, had fewer than 250 employees. Around half of the firms reported on the period between July and September 2026, and the remainder on the period between April and September 2026. The SAFE has been conducted quarterly since 2024. In this round, question Q32 was re-introduced for the six-month reference group with a new sub-question Q32a on intellectual property assets, and questions on export markets and late payments were added.