Prague More than a quarter of small and medium-sized companies will not have the money to repay their loans. On Saturday, the six-month loan deferral period ends. This emerges from a September survey by Lidya among 330 entrepreneurs. Given that the research was conducted before the introduction of current government measures, it can be expected that the reality will be worse.
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The repayment moratorium is coming to an end, and banks are preparing a safety net for borrowers |
One of the forms of support for companies and individuals after the spring economic shutdown due to coronavirus was the possibility of postponing loan repayments for up to six months. “The six-month period for deferring loan repayments is coming to an end, but it seems that it was not long enough for small and medium-sized enterprises,” said Libor Vaníček, head of the Czech branch of Lidya.
While 57 percent of respondents did not think about how they would pay the installments before the end of September, a fifth considered getting another loan to pay off the debt. “It is interesting that seven percent of small and medium-sized enterprises assumed that loan repayments would be further deferred and planned to request this deferral,” added Vaníček.
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Even before the introduction of current government measures, 14 percent of respondents expected that they would be forced to close down due to their inability to repay loans. Today, many establishments are closed or facing a significant drop in sales, and few believe that this situation will last only a few weeks announced by the government. So, according to Vaníček, it can be expected that there will be even more of those who give up.
The Czech National Bank survey showed that for the fourth quarter of this year, part of the banking market announces a further tightening of corporate lending. Last week, in connection with the government’s new anti-pandemic measures, banks expressed their readiness to provide assistance on an individual basis to all clients affected by the pandemic. Whether through deferred payments, reduced monthly payments, loan consolidation or other restructuring instruments. The Chamber of Commerce has announced that it will monitor banks’ promise for a more accommodating approach to clients when assessing their credit obligations.
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Small and medium-sized enterprises are the engine of every economy. According to the Ministry of Industry and Trade, they represent 99.8 percent of the total number of active business entities, they contribute almost 55 percent to the added value of our economy and 58 percent to the total employment.
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