Enterprises’ financing problems have eased but are still widespread
The availability of financing for enterprises eased substantially in 2010 compared to the recession year 2009.
The availability of financing for enterprises eased substantially in 2010 compared to the recession year 2009. This is shown by the annual Business Finance Survey conducted by the Confederation of Finnish Industries, the Bank of Finland and the Ministry of Employment and the Economy.
About 15–25% of all businesses seeking new finance found it difficult to tap external sources, as compared to 25–35% in 2009. Financing problems eased most in respect of microenterprises with less than ten employees. Despite the easing, it is clear that financing problems are still more widespread than in the years prior to the recession.
Interest rate margins on new corporate loans widened
Interest rate margins on new loans widened for almost every second medium and large business, but only for a fifth of the microenterprises. Interest rate margins on new loans to medium and large businesses also increased relatively more than those on loans to smaller enterprises.
Caution in seeking finance
Aggregate business demand for funding does not appear to be increasing. Compared to the survey for 2009, a slightly larger portion of micro and small enterprises intend to seek new funding. Medium and large businesses plan to acquire less funding than before.
Interest in securities-based and venture capital funding is increasing
Medium and large businesses are increasingly seeking funding via securities market instruments, such as commercial paper and other bonds. Securities issuance is gaining in importance as a source of funding for large enterprises, also as measured by intentions to seek funding.
Interest in venture capital funding has also increased slightly for businesses of all sizes, even though the portion of enterprises that received funding from venture capital investors was smaller than in the previous survey.
Efficiency gains from electronic billing
Very few enterprises use electronic billing extensively, even in business-to-business invoicing. Slightly less than 5% of enterprises pay the majority (over 60%) of their bills via electronic invoices and just over 5% send the vast majority of their bills as electronic invoices.
The Business Finance Survey gives a comprehensive picture of enterprises’ financing situation. The survey conducted in September 2010 drew responses from 997 enterprises from different provinces and industrial classification groups. The survey has been conducted since 1994. The survey was carried out by Statistics Finland on behalf of the Confederation of Finnish Industries, Bank of Finland and Ministry of Employment and the Economy.
The report on the Business Finance Survey 2010 (pdf, in Finnish)
Jukka Vauhkonen, Economist, Bank of Finland, jukka.vauhkonen(at)bof.fi,tel. +358 10 831 2111.
Tommi Toivola, Senior Advisor, Confederation of Finnish Industries, tommi.toivola(at)ek.fi, tel. +358 9 4202 3292