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Will Europe's Small Business "Credit Gap" Shrink?

FICO research has uncovered a hint that the “credit gap” for small businesses may indeed be shrinking. In our latest survey of European credit risk professionals conduced with Efma, the difference between the percentage of respondents who forecast an increase in credit requested and the percentage who forecast an increase in credit granted fell dramatically.

Here are the results from our survey of more than 70 bank risk officers, conducted in September and October. 35% of respondents say the volume of credit requested by small businesses will rise, and 26% say the volume granted will rise. That’s a 9% “gap,” but still well below recent forecasts.

Supply and Demand Fall 2012
At the 7th Annual SME Banking Conference in Vienna in mid-November, I put these results in context by looking at the forecasts from our other 2012 surveys of European risk managers. The credit gap for small businesses reached its highest point in 2 years in July 2012, and has been cut in half in the latest survey.

SME Credit Gap 2012

One survey does not make a trend. Still, there is reason for European small business owners to be cautiously optimistic.

Now the bad news: The credit gap appears to be growing for consumers. 35% of respondents see the amount of credit requested to rise, compared with just 15% who see the amount granted to rise. If consumers do intend to increase borrowing, will the supply be there to greet them?

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