Europe has entered a period of economic slowdown that is also affecting Spain . The European Commission has reduced its growth expectations for the Spanish economy for 2020 by four-tenths, placing it at 1.5%. In this scenario, SMEs and self-employed workers are usually the most affected because the decrease in private consumption leads to a loss of profits.
The final blow for SMEs that cannot cover their operating costs
Although Spain's business fabric is much more solid than it was before the economic crisis, it is difficult for SMEs to emerge unscathed from an economic slowdown. The Bank of Spain recently warned of an increase in companies that do not generate sufficient profits to meet their financial expenses . In fact, this is the first time since the economic crisis that the number of businesses with negative profitability ratios has increased.
If these SMEs do not have access to cheap credit, which is particularly cameroon mobile phone number data difficult since they do not usually have a solid business plan and cannot demonstrate the minimum profits that banks usually require, it will be difficult for them to survive a cycle of economic slowdown because they do not generate sufficient income to cover their operating expenses . The report indicates that “ the fall in profitability in recent months has been mainly due to the deterioration that operating activity has experienced in this period, in a context of economic slowdown .”
SME confidence in business expectations is falling
The clouds over the Spanish economy have already affected small business owners, creating a more pessimistic view of the coming months. The National Institute of Statistics' business confidence indicator revealed a sharp drop in business expectations during the first quarter of this year, a particularly gloomy outlook for SMEs with fewer than 10 employees , whose confidence stands at 17.1 negative points, the worst figure since 2016.
This means that the number of small business owners who believe that their business will slow down has increased , compared to those who maintain a more optimistic attitude. Although this feeling is quite widespread, the most pessimistic sectors are Commerce, Transport and Hospitality .
These entrepreneurs are likely to limit spending and make fewer investments, which will stagnate business growth . Employment will also suffer, especially that generated by self-employed workers and SMEs with fewer than five employees, whose hiring volume has already been falling for several months.
Greater difficulties in accessing credit
Banks are concerned about the uncertainty and economic slowdown that is looming on the horizon, so it is understandable that there is a slowdown in the granting of loans to companies.
The Survey on Bank Lending in Spain revealed that during the fourth quarter of 2019 there was a slight tightening of the criteria for granting loans in all types of financing for SMEs . These difficulties are due, at least in part, to the increase in the perception of risks, the decrease in growth expectations in some sectors of the economy and the increase in the non-performing loan ratio that occurred during the second half of 2019.
This scenario is expected to continue or even intensify for much of 2020. Obviously, the obstacles to accessing credit and an increase in its costs also have a negative effect on SMEs, reducing their investment capacity in other areas, such as hiring, implementing new projects, expanding operations or internationalizing, since they have fewer resources to do business.