European Central Bank SAFE survey shows lower corporate loan rates and a broadly unchanged financing gap in the euro area

The European Central Bank published the first quarter of 2025 results of the Survey on the Access to Finance of Enterprises (SAFE), showing that firms are seeing lower interest rates on bank loans as monetary policy easing transmits through to borrowing costs. Bank loan demand fell while availability was broadly stable, leaving the bank loan financing gap indicator virtually unchanged and firms expecting a modest improvement in access over the next three months. A net 12% of firms reported lower bank loan interest rates (from a net 4% in the previous quarter), driven by large firms (net 26%) while SMEs were broadly flat (net 1%), even as firms reported tighter non-rate terms such as higher charges, fees and commissions (net 24%) and stricter collateral requirements (net 13%). A net 4% reported a reduced need for bank loans and a net 1% reported lower availability, taking the bank loan financing gap indicator to net -1% (from net 1%); the composite financing gap across instruments was also close to flat (net 1%). Bank loan applications rose to 19% of firms and obstacles fell to 5% (from 6%), with 7% reporting improved banks’ willingness to lend, but the general economic outlook remained the main factor seen as reducing external finance availability (net 21%). The survey was conducted between 10 February and 21 March 2025 across 11,022 euro area firms, 92% of which had fewer than 250 employees, with respondents split between three-month and six-month reference periods.