Although the hardest months of the COVID-19 pandemic are behind us, Spanish SMEs continue to suffer the consequences that this situation entails beyond the short term. Liquidity and solvency problems, Together with the difficulties in accessing aid and financing, as well as the delay in digitization, it not only makes them lose competitiveness, but also makes them vulnerable that requires urgent measures.
After overcoming the more direct effects of the pandemic, SMEs still do not improve their situation and, many of them, are already beginning to suffer serious liquidity and solvency problems. This is at least highlighted by the ‘VII Report on the economic and labor situation of the SME’, carried out by Fepime, which highlights the difficulty for these small and medium-sized companies when it comes to access credits, especially given the sharp rise in interest rates.
According to Fepime, this is one of the main causes that are weighing on the recovery and growth of SMEs, the segment of companies that is suffering the most from the impact of the pandemic. But so do micro-businesses, due to the strong decrease in your billing which has affected 67% of companies with less than ten employees.
The report highlights that this strong reduction in turnover has affected 52.9% of companies with between 10 and 49 workers, and 47.2% of those with more than 50 employees.
In consecuense, liquidity problems they are being more common in micro and small companies, in 33.8% of them, compared to 29.6% of medium-sized companies and in 19.8% of large companies. Added to this are solvency problems, more pronounced in micro and small companies, in 25.9% of cases, compared to 22.4% in medium-sized companies and 14.6% in large companies.
The difficulty in having supplies also affects the smallest companies more, since only 11.9% have experienced an increase in their turnover during the pandemic, compared to 14.9% of medium-sized companies and 22.5% of large corporations.
In this situation, another key point to take into account when evaluating the current situation of Spanish SMEs is that 72% are being forced to accept longer payments of which they would like. According to Intrum’s ‘European Payment Report’, these percentages are slightly higher in the case of large companies (44%), and are much lower in the case of public sector companies (10%).
However, SMEs have improved compared to last year, which had 18 percentage points more, although fears persist that customers will not be able to meet their payments, according to 63% of the companies surveyed. This situation exacerbates the uncertainty of these businesses, even more so, considering that 60% do not trust the payment capacity of customers who have outstanding accounts, a figure lower than the European average, which stands at 66%.
The vulnerability of SMEs
Undoubtedly, these figures highlight the complicated situation of Spanish SMEs, which closed last 2021 as those in a situation of greater vulnerability throughout Europe. This is pointed out by data from the European Central Bank (ECB) that shows how profitability indicators and economic vulnerability of SMEs in the euro zone they improved last year, except in Spain.
The study by this organization indicates that, although the situation of vulnerability of small and medium-sized Spanish companies has been reduced by 10 percentage points in the last year, from 17.1% to 7.1%, these are data that are still above the community average, which is around 5%, and countries such as Italy, with 5.5%, or France, with 5.6%.
This delicate situation of Spanish SMEs, which mainly comprises the country’s business fabric, leads experts to point out the urgent need to guarantee them access to finance in order to keep moving forward.
However, the ECB points out that this is not the only challenge that SMEs, both Spanish and European, must face. The lack of a qualified workforce and the difficulty in finding clients are two major challenges that concern SMEs even more than obtaining funds, which continues to be their main source of financing through bank products and subsidized loans.
The necessary improvement of access to credit
The tightening of some conditions in access to financing is behind, to a large extent, the difficult situation of SMEs. This has led to the percentage of small and medium-sized companies that applied for bank loans in the past year falling to 23%, marking a record low since the ECB began conducting this survey in 2009.
The increase in interest rates It has been one of the main obstacles for SMEs in terms of access to credit, but also a tightening of the required guarantees and other conditions beyond the amount and term. To this is added another significant data: according to the Bank of Spain, the percentage of SMEs whose financing requests have been rejected only during the months of April to September of last year increased by two percentage points compared to that observed six months before, up to stand at 7%.
Likewise, the percentage of discouraged demand, that is, of companies that chose not to apply for loans because they thought they would not be granted them, continues to remain at “relatively high” levels, somewhat above 5%.
Undoubtedly figures that reflect the delicate situation of SMEs that, far from having their access facilitated financial aid, they find more and more obstacles to advance in their recovery.
As a positive counterpoint, from the ECB they highlight that the percentage of Spanish SMEs that applied for bank loans between April and September of last 2021 fell six percentage points compared to the data registered six months earlier, and stood at 23%, similar to the average of the eurozone.
However, for the Bank of Spain this “marked downward trend” is due to lower financing needs of Spanish companies in recent months, after the extraordinary use of credit they showed in 2020. A matter reinforced by the fact that many companies They perceive that their ability to access bank financing has improved between the last months of April and September, and it did so at a rate “slightly higher” than in the previous six months, according to the latest data collected.
This improvement occurred despite the fact that the number of SMEs that consider that the general economic situation It damages the obtaining of new credits, surpassing those who think otherwise.
Added to this is the fact that 10% of Spanish SMEs perceive a greater willingness of entities to grant loans, a figure very similar to that of the euro zone.
Steps to recovery
These economic needs are a consequence of the evolution of the business of SMEs which, according to the ECB indicators, in the case of Spain, there are more that point to an increase in sales between the months of April and September, than those that they point out the opposite.
Are we at the beginning of an upward path to economic recovery? There are still issues to be resolved before launching the bells to the flight.
Despite this positive evolution of turnover, the increase in costs has led 16% of Spanish companies to declare a decrease in their economic results during the second and third quarters of last year, a higher percentage than the previous year. observed in the euro zone as a whole, where 6% of SMEs declared it. But nevertheless, is a “significantly” lower percentage than that registered in Spain between October 2020 and March 2021, 43%.
The lack of customers is perceived as the main problem that affects their activity, according to 22% of SMEs, while, in the euro zone, this factor ranked second, surpassed by the difficulty to find qualified staff.
In contrast, access to finance was once again, among all the factors included in this question, the concern cited by a smaller number of companies both in Spain and in the euro zone, with 8% and 7%, respectively. , percentages slightly lower than those registered six months earlier.
And another question to solve: delays in payments by clients. In the case of Spain, 7% of SMEs report having had these types of problems regularly, while 27% of them would have suffered them only occasionally, both percentages lower than those observed a year ago (10% and 31 %, respectively).
New avenues for financing
If there is one element that is contributing to improving the performance of organizations and preparing them for the future, it is technology. The commitment to technological innovation and digitization in today’s business environment has become a crucial aspect that can tip the balance towards the success or failure of a business. In the case of small businesses, it can be a differential factor.
European Union aid approved last December with 10,000 million euros for Spain to promote digitization could be the lifeboat for a large part of the 2.7 million Spanish micro-companies that see technology adoption as the key to continue advancing, growing and being competitive .
While waiting for these funds to reach companies throughout the first quarter of 2022, SMEs in our country continue to face an emergency situation that needs to be addressed.
It should be remembered that microenterprises represent around 65% of Spanish GDP, and generate between 35% and 40% of employment, so the arrival of these aid, together with aid from the central government through the ‘Digital Kit’ program to boost their digitization and ranging from 2,000 to 12,000 euros, could be a great boost for these businesses.
However, these aid will not be enough. Facilitating access to them, as well as to financing, continues to be a pending issue that requires a step to action before it is too late and thousands of businesses, today on the tightrope, disappear.
This leap into the digital world is only a first step towards the much-needed recovery of the SME fabric in our country.