Access to financing has deteriorated, yet despite this it remains one of the least limiting factors for corporate business operations

02/28/2023 / Press release

Companies assessed the situation regarding access to financing in 2022 as being worse than in 2021. The worse assessments resulted from increased uncertainties involving external factors that impact business (current economic conditions, higher prices of energy), and the tightened conditions of financing from banks. Despite this, access to financing remains in 2022 one of the least limiting factors for corporate business operations. Companies also reported an increased need for all sources of financing, for which reason the financing gap has increased (the difference between needs and access to financial resources).

Banka Slovenije has been conducting its survey of firms’ access to financial resources since 2011. The survey aims to measure the opinions of firms with regard to the state of the financing market, and provides useful backup to the information obtained from banks.

We have determined from the outset that 25% of companies mention inflation and domestic demand as the most limiting factors in 2022, and they also highlight among significant factors production and labour costs, along with the availability of qualified personnel and managers, which is a consequence of the current economic climate. Access to sources of funding was again in 2022 one of the least significant limiting factors for corporate business operations (it was noted by less than 10% of companies).

Due to the operating uncertainties and rising prices, corporate needs for all external sources of financing have increased. Relative to 2021 there have been major increases principally in the net requirements of firms for bank loans, which is particularly true for large companies, while there has been a reduction in the net requirement for own capital, with this reduction most pronounced in large companies. Companies report a deterioration in access to external financing for all sources of external financing, mainly due to the impact of the general economic environment.

The deterioration in access to bank sources affected mainly small, medium-sized and micro companies. Large companies still assessed access to bank sources of funding as positive. Due to the increased needs, firms increased the number of applications for the majority of sources of external financing, and were successful in obtaining funds, with the proportion of rejected applications remaining negligible. In 2023 companies do not anticipate any improvement in access to external sources of financing. The increased needs and at the same time the reporting of a deterioration in access to external financing means that in 2022 the financing gap increased, and is just a little smaller than during the epidemic in 2020.

The majority of companies also report on planned investments in the next three years, which they intend to finance mainly through their own sources and less through bank loans. Large companies will for the most part invest over a million euros, while small and medium-sized companies will invest less than a million euros.

Companies estimate that they will be able to pay for higher energy costs

This time our survey included a set of questions about the effect of energy costs on business operations. It turns out that the increased energy prices are impacting mainly large companies. While around 20% of all companies report that the costs of energy products have increased by less than 5%, nearly 35% of large companies report that their energy costs have risen more than 200%, and 12% of small and medium-sized companies report this.

Despite this increase, around half of all firms estimate that they will still be able to pay for the higher energy costs in the future. A significant contributor to this is the adaptation to higher energy costs through measures to improve energy efficiency and to pursue self-sufficiency in electricity, while on the other hand companies have also raised the prices of products and services and have verified existing contracts with suppliers.