Outstanding loans of small and medium enterprises in 48 countries surveyed by the Organisation for Economic Cooperation and Development jumped significantly in 2020 — the first year of the Covid-19 pandemic, a report has shown.
The outstanding loan is the debt that SMEs owe to creditors or financial institutions. The average stock of SME loans surged by 4.9 per cent in 2020, the highest annual increase since the OECD started recording the figures about 10 years ago, the Paris-based agency said in its latest report.
Outstanding loans had grown at an average annual rate of 1.2 percent during 2015-2019 period. The increase in 2020 was underpinned by an increase in government-led loan guarantees that rose 110 percent annually that year, the debt moratoria, as well as direct lending to SMEs, which soared 17 percent on an annual basis, the report revealed.
The OECD’s latest report offers insights on SME financing trends and policies for 48 countries, including OECD member countries, for the period 2007 through the first half of last year.
“Support measures and favourable lending conditions have left many SMEs with higher levels of debt that will need to be tackled going forward,” OECD Secretary General Mathias Cormann said.
Emergency support measures — including monetary policy interventions by central banks — also pushed interest rates down to record lows, with the median SME interest rate falling by 0.4 percentage points in 2020, the largest reduction since 2009.
In most economies covered by the report, unprecedented support measures also helped avoid a wave of insolvencies.