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The availability of trade credit has remained stable for small businesses across the EU, despite a “complex set of challenges” such as rising costs and tighter lending conditions, the European Commission has found. 

A survey on SME access to finance carried out by the Commission and European Central Bank finds that during 2024, nearly three-quarters of respondents said there had been no change in the availability of their trade credit facilities. 

Just 6% of SMEs said access to facilities deteriorated last year, “suggesting increasing stability in trade credit conditions”, the Commission says in a report published this month. That figure was highest in Germany, Austria and Lithuania, at 13%. 

Of companies that applied for trade credit lines, 73% received the full amount sought, while a further 16% received most or a limited amount. Just 2% said their application was rejected outright. 

Around a third of European SMEs see trade credit as a relevant source of financing, and the report concludes that access to facilities “remains generally available for those who seek it”. 

However, it also highlights “concerning trends” around SMEs’ financial performance. Profits have only risen for a fifth of firms surveyed, and more than a quarter cite challenges around rising interest rates and prices as barriers to financing. 

“Rising costs, tightening lending conditions and lower growth expectations point to an increasingly complex operating environment that is affecting both business performance and outlook,” the report says. 

“These findings suggest that while the acute phase of recent crises may have passed, SMEs face a complex set of challenges that could constrain their growth and development in the coming years.” 

One of the “persistent” difficulties faced by SMEs is late payment by private sector buyers, the report says. 

Nearly half of SMEs say they encountered problems with late payment in the previous and current two quarters, with 13% citing it as a regular issue. Late payments were most commonly reported in Malta, Poland, Belgium and France. 

Around a third of respondents say late payments have knock-on effects on their ability to pay suppliers, and 16% say it has resulted in delayed loan repayments or created additional financing requirements. 

The European Commission has taken aim at late payments, proposing in late 2023 to limit all payment terms to a maximum of 30 days, with fixed fees and interest automatically added to overdue amounts. 

Those plans were later shelved, however, following industry warnings that the lack of flexibility could make it unviable for lenders to provide supply chain finance facilities – threatening the survival of a multi-billion-dollar industry. 

The SME survey calls on policymakers to continue finding ways to address late payment, as well as to support the development “of alternative financing sources beyond traditional bank lending”.