The cost of credit remains a major hurdle for companies
A recent report by the Unimpresa Research Center reveals that average interest rates on business loans stand at 4.85%, triple the level seen in 2021, when rates were just 1.36%. This increase is the result of the European Central Bank’s (ECB) monetary tightening policy aimed at curbing inflation. Despite the recent reduction in the reference rate from 3.25% to 3%, credit costs remain high, limiting Italian companies’ ability to invest and plan effectively.
A steep climb since 2022
Credit costs began to rise in 2022, with average rates climbing to 3.41%. The situation worsened in 2023, peaking at 5.27% in October. Only in 2024 did a slight reduction occur, bringing rates down to 4.85% in October. However, these levels are still far from the favorable credit conditions of 2021.
Loans under €1 million followed a similar trend, with rates increasing from 1.75% in 2021 to 5.21% in October 2024. For loans above €1 million, rates rose from 0.89% in 2021 to 4.42% in October 2024.
The burden on businesses: high costs and fewer opportunities
The rise in rates has significantly impacted loan repayments. For a ten-year €1 million loan, monthly payments jumped from €9,156 in 2021 to €11,312 in 2023, before falling slightly to €10,902 in 2024. A similar trend was observed for €5 million loans, with payments peaking at €54,749 in 2023 and later dropping to €52,451 in 2024.
Giuseppe Spadafora, Vice President of Unimpresa, stated, “it’s not the horse drinking less, but the water offered that’s undrinkable.” This highlights how current credit conditions are insufficient to support strategic investments and long-term financial planning.
What does the future hold?
The ECB’s recent rate cut could pave the way for further reductions in credit costs, providing some relief to businesses. However, it remains uncertain how quickly and to what extent banks will pass these reductions on to their customers. While a return to favorable financing conditions seems distant, positive signals might emerge in the coming months.
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