Bank financing envelopes for SMEs slow down

After two years marked by the health crisis, demand from SMEs for medium and long-term bank financing is slowing, with companies focusing more on short-term financing in 2023.

A reduction in bank financing envelopes

While in 2021 and 2022, companies invested heavily in machinery, rolling stock, works, real estate and business buyouts, with an increase of almost 14% in loans granted to for-profit legal entities (companies, traders, craftsmen), the trend changed in 2023.

Indeed, interviewed by Les Echos newspaper, Banque Populaire's Director of the Corporate and Engineering market and Caisse d'Epargne's Director of the Corporate, Social Economy and Institutional markets, Jérôme Lamotte and Frédéric Cormerois, explain that they have " less visibility on what's going to happen in the coming months ". However, both banks maintain the same commitment to supporting businesses, with a level of requirements that has not increased.

There are several possible reasons for this slowdown in demand for medium- and long-term financing. Business leaders may have wanted to postpone some of their investments in the wake of soaring commodity and energy prices. The war in Ukraine had an impact on all economic sectors. Theannual survey published by the Initiative France network on February 2, 2023 revealed that 58% of entrepreneurs surveyed felt affected by the rise in raw material prices. In the energy sector, INSEE, which surveyed electricity suppliers, anticipates an 84% rise in electricity selling prices to business customers in 2023, before taking into account support measures such as theelectricity cushion, the gas and electricity bill payment assistance scheme, or the cap for very small businesses.

New financing needs

The bank financing needs of small and medium-sized businesses will change in 2023. They are more concerned with working capital requirements. WCR refers to the amount a company needs to disburse to cover cash-flow timing differences between outgoing and incoming payments related to its business.

To better manage their WCR and keep their accounts under control, companies can :

  • Improve stock rotation,
  • Negotiate payment terms with suppliers,
  • Get paid faster.

They also have the option of mobilizing their customer receivables within the framework of short-term bank financing adapted to recover cash immediately viafactoring, discounting, cession Dailly, credit insurance, etc.

Nevertheless, Jérôme Lamotte confides to Les Echos that debt and bank financing won't do everything. " There may be a case for opening up the capital," he says.