Summary
Banks across Europe have insisted in recent months any decline in lending is due to a falloff in demand, not supply. Supply is not useful if the line or rate does not make any sense.
Analysis
Most solvent small-business owners, are motivated to keep their small-bussiness solvent and choose to not incumber their firms with increasing borrowing costs. Scant availability of useful bank lending continues to penalize smaller companies that have no access to bond markets.
There must be a solid balance of macro-economy and the available credit at useful interest rates which allow the business to utilize the line in ways which can profit the business and allow for a good margin to allocate for repayment.
We see small-businesses and individuals saving more, reducing debt and not extending lines of credit during this period of the beginning of economic recovery.
Mark Mariotti consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
