Businesses across the euro area reported stricter financing conditions and higher borrowing costs during the second quarter of 2026, according to the latest European Central Bank (ECB) Survey on the Access to Finance of Enterprises (SAFE).
The findings indicate a significant rise in the share of companies reporting higher interest rates on bank loans, while firms also continued to face elevated financing costs and increased collateral requirements. The ECB said the ongoing conflict in the Middle East has created substantial challenges for businesses across the currency bloc.
Lending costs continue to increase
According to the ECB, companies reported a strong net increase in interest rates on bank loans during the second quarter of 2026.
The net percentage of firms reporting higher loan rates reached 42%, compared with 26% in the previous quarter.
The increase was reported by both small and medium-sized enterprises (SMEs) and large companies.
At the same time, a net 31% of businesses reported increases in other financing costs, including charges, fees and commissions, down from 37% in the previous quarter.
Collateral requirements also increased, with a net 10% of companies reporting higher demands for guarantees or security, compared with 14% in the first quarter of 2026.
Financing needs and loan availability
Businesses reported a slight increase in their need for bank financing.
The net percentage of companies indicating greater demand for bank loans rose to 2%, up from 0% in the first quarter of 2026.
Overall availability of bank loans remained broadly unchanged. The net percentage stood at -1%, compared with -3% in the previous quarter.
The ECB noted differences between company sizes. Loan availability improved for large enterprises, with a net balance of 4%, while it deteriorated for SMEs, where the net balance fell to -4%.
As a result, the bank loan financing gap, which measures the difference between demand for bank loans and their availability, remained positive and increased slightly to 3%, from 2% in the previous quarter.
Economic outlook remains a key concern
The ECB said fewer businesses than previously expected a deterioration in the availability of external financing over the coming months.
However, companies continued to identify general economic conditions as the main factor limiting access to external funding.
A net 29% of firms cited the economic outlook as a constraining factor, compared with 26% in the previous survey round.
Businesses also reported a further improvement in banks' willingness to provide credit, with the net percentage increasing to 6% from 5%.
At the same time, a net 10% of firms expected their own business outlook, including sales and profitability prospects, to have a more negative impact on external financing availability. The corresponding figure in the previous survey was 8%.
Expectations for prices and wages
Companies indicated more moderate expectations for future increases in selling prices, non-labour input costs and wages over the next 12 months.
According to the ECB:
- Expected selling price growth declined to 3.2%, from 3.5%.
- Expected increases in non-labour input costs, including energy, fell to 5.2%, from 5.8%.
- Expected wage growth eased to 2.5%, compared with 2.8% in the previous quarter.
Inflation expectations remain stable
The ECB said business inflation expectations remained broadly unchanged.
The median inflation expectation over both a one-year and three-year horizon remained at 3.0%, unchanged from the previous survey.
The median expectation for inflation over a five-year horizon increased slightly to 3.1%, from 3.0% previously.
The ECB added that assessments of inflation risks over the five-year horizon were largely unchanged, with 65% of companies reporting that upside risks remained predominant.
Geopolitical tensions and artificial intelligence investment
According to the ECB, the ongoing war in the Middle East has created significant challenges for euro area businesses.
In response to special survey questions, firms identified several strategies to address geopolitical tensions:
- 36% reported seeking alternative suppliers for inputs and materials.
- 29% reported seeking alternative energy suppliers.
- 31% reported investing in energy efficiency measures.
- 21% increased inventories or built precautionary stockpiles.
- 15% reviewed insurance arrangements or trade finance structures.
- 8% reported reducing or suspending activity in affected export markets.
The ECB noted that large enterprises were more likely to have implemented mitigation strategies, while SMEs were less likely to have adopted or planned such measures.
Regarding artificial intelligence investment over the next 12 months, companies said they expected to rely primarily on internal funds, cited by 72% of respondents.
External financing sources, including bank loans, grants and leasing, each accounted for approximately 16%. Equity and venture capital were cited by 6%, while debt securities accounted for 1%.
Source: CNA
