Small Businesses in Europe Can’t Borrow to Stay Afloat

closed business barcelona spain

Small business owners in Europe are continuing to face the difficult economic times felt here in the U.S. for the last several years.

We recently reported on small business lending improving for the first time in 10 quarters here, but in the Euro zone, several countries’ small business owners are facing difficult and uncertain times in the months ahead, and they’re finding it difficult to take out loans to keep their operations going through this year.

According to a Reuters report this week, defaults on loans to small business owners in Spain and Italy are increasing at a worrying rate. The state of the banks in these countries increases the worry, since they are not in a position to lend money to spur economic growth.

Just as it is here, small businesses carry the load in Spain, Italy and much of the Euro zone, but their inability to borrow money to bail them out of these difficult times has many facing the decision to close. Reuters reports that 1 in 10 loans in Spain in December was behind in payments and the country saw an 82 percent rise in businesses seeking credit protection.

The amount of “bad loans” has forced many banks to set aside large sums of money to cover losses this year, hampering their ability to loan to small businesses. Three of Spain’s biggest banks posted an average of 60 percent profit loss last year. Italian banks set aside more than 14 billion euros to cover bad loans there, too.

Closed Business, Barcelona, Spain Photo via Shutterstock

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Joshua Sophy - Assistant Editor

Joshua Sophy Joshua Sophy is the Assistant Editor for Small Business Trends. He is also a journalist with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

One Reaction

  1. This news does not bode well for the Eurozone. They are in recession now with millions being jobless. I wonder how long this quagmire will last.

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