Coronavirus epidemic also reflected in firms’ access to financing

Firms have assessed the situation last year in the area of financing, which was profoundly affected by the coronavirus epidemic, as worse than in the previous years. A survey of firms conducted by Banka Slovenije has revealed a positive financial gap at firms of all types, irrespective of size. The demand for financial resources outstripped access to them. Firms expect similar trends to continue this year. In connection with the coronavirus epidemic, firms are reporting adjustments to operating costs, and large-scale take-up of various forms of government support.

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. 

The initial finding is that firms in Slovenia are mostly financing themselves from internal resources, from bank resources and via leasing. Last year SMEs mainly expanded their use of internal resources compared with the previous year, and consequently reduced their use of external resources. By contrast, large enterprises increased their use of all sources of financing over this period. Firms in both categories saw a sharp increase in the use of government support during the coronavirus epidemic.

SMEs gave a negative assessment of their net access to all sources of financing in 2020, with the exception of leasing. They were nevertheless more or less successful in obtaining their desired funds via all sources of financing, and the share of rejected applications also declined. Large enterprises saw their success in obtaining funds via all sources of financing decline slightly compared with 2019, but remained more successful overall than SMEs.

In recent years firms have reported increased demand for all sources of financing, and last year it outstripped access for the first time. The financial gap was thus positive in both corporate segments. Firms also assess the terms of bank financing as worse than in 2019, in particular pricing terms such as the interest rate.

They are anticipating an additional deterioration in access to all sources of financing this year, most notably internal resources and bank resources. The vast majority of firms (90% of SMEs and 98% of large enterprises) are nevertheless planning investment over the next three years, where despite restrictions the key sources of financing will remain internal resources and bank loans.

Corporate response to the situation caused by the coronavirus epidemic

The survey revealed that under the impact of the epidemic firms first adjusted their expenditure on business travel and investment, and then later their wage costs. The epidemic has had the greatest negative impact on turnover and sales revenues, demand, operating costs, and production costs and labour costs. The largest obstacles that firms face are cost adjustments and absences from work, followed by cashflow management and demand.

The government support is mostly assessed by firms as neutral or positive. Around 90% of large enterprises and 60% of SMEs have applied for government support, mostly refunds for the furlough scheme, the payment of social security contributions for furloughed workers, refunds for quarantining, and refunds for absences caused by force majeure. The majority of firms that submitted an application have also received their funds, although large enterprises were generally more successful than SMEs.

The survey on firms’ access to financing in 2020 can be found on the link (Slovene version only).