Large businesses have the lion’s share of bank financing, and they also borrow on more favorable terms than other businesses. Large businesses are doubly favored because they have the greatest access to low-cost Recovery Fund loans.
As can be seen from the data recorded in AnaCredit’s analytical credit database and presented in the Bank of Greece’s monetary policy report, the balance of domestic non-financial enterprises (NFIs) loans to domestic credit institutions amounted to 64.7 billion euros. in February of the current year. The largest share of that amount was allocated to large enterprises. In particular, large enterprises accounted for 44% of the total balance, very small enterprises – 23%, medium enterprises – 19%, small enterprises – 15%.
As for the number of loans, more than half (53%) belong to micro-enterprises. About 1/3 corresponds to small companies, about 1/8 to medium companies, while only 1/25 of the number of loans concerned large companies.
AnaCredit’s analytical credit database reveals that most loans refer to: As for the pricing of one loan product, the interest rate of open-ended loans is slightly higher than that of fixed-term loans. It is noteworthy that more than 75% of business loans “come” with a variable interest rate.
As an important feature, it is important that large companies borrowed on average on more favorable terms compared to small companies, according to the Bank of Greece, this can be justified on the one hand by the qualitative characteristics of the portfolio. issue (lower interest loans) and, on the other hand, because of the greater possibility to negotiate the terms of the loan due to the higher average loan size, but also because of their access to alternative sources of financing such as bonds and capital markets. The above differentiation is observed in all individual categories of loan products.
Therefore, as the BoE points out, the highest risk loans to small and micro enterprises are more expensive than the corresponding loans to large enterprises., possibly because many loans to small businesses involve a relatively higher risk of default. Notably, for half of the cheapest nominal interest loans, small businesses borrow 1.3 percentage points higher than large businesses, while for 90% of loans, the difference in question is 2.2 percentage points. .
As for the product category lending rate for the three most important product categories by volume, there appears to be a pricing differential for non-fixed-term loans compared to fixed-term loans, possibly due to the higher credit risk of the loans. of this category and increased administrative costs for banks. Thus, the average interest rate on loans with a regular repayment period reached 6.7 percent in February 2024, both for loans with a regular repayment period and for loans with a fixed term, while the average interest rate on revolving loans was 0.7 percentage points. higher, up to 7.4%.
Cheap loans in large companies and recovery fund
As mentioned above, the country’s big businesses are doubly favored because they have great access to cheap loans from the Recovery Fund. In particular, more than 2.5 billion euros of loans were provided to them, which mainly refer to green and digital transition investments.
Seven of the total 38 largest loans of the Recovery Fund exceed 100 million euros. In addition to PPC and ADMIE, Olympic, which operates AVIS brand car rental, secured a loan of more than 200 million euros to renew its fleet. For the same purpose, an almost as large loan (150 million) was provided by Autohellas.