During the first quarter of the year, practically two out of every 10 companies accessed new bank credit because the terms offered by financial institutions were more attractive compared to the previous quarter; However, high interest rates were the reason why eight out of 10 made the decision not to access a new loan, the Bank of Mexico (BdeM) announced this Thursday.
When presenting the analysis on the evolution of financing to companies during the first quarter of the year, the central bank indicated that 16.7 percent of companies used new bank loans
between January and March.
The group of firms that resorted to new loans from financial institutions expressed having faced more favorable conditions than the previous quarter in terms of the terms offered
indicated the central bank.
However, 83.3 percent of the companies surveyed between January and March declared that they had not taken out new credit from commercial banks, and the main limitation to accepting it was financing market interest rates
according to the BdeM.
The limitations indicated by the companies, in order of importance, were the interest rates of the credit market, the amounts required as collateral, the conditions of access to bank financing, the general economic situation and the willingness of banks to grant it.
stated the central bank.
Other limitations, he highlighted, were access to public support, the sales and profitability of the company, the capitalization of the company, the difficulties in paying the service of the current bank debt and the credit history of the firm.
Most are financed with their suppliers
The central bank pointed out that, additionally, of the total number of companies surveyed, 56.6 percent indicated that the current conditions of access and cost of the bank credit market do not constitute a limitation to be able to carry out the current operations of their company; 24.1 percent said that these conditions are a minor limitation and 19.3 percent do see them as an obstacle to their operations.
According to the document, 64.4 percent of companies use supplier financing; 30.5 percent used credit from commercial banks; 10.3 percent obtained financing from other companies in the corporate group or the headquarters, 2.6 percent from development banks, 1.3 percent from banks domiciled abroad and 0.3 percent through debt issuance.
Businesses suffer from low sales
The central bank’s analysis indicates that the main problem that 37.6 percent of companies faced between January and March was low sales levels, while between October and December 2023 this problem affected 29.4 percent of firms.
For 12.8 percent, competition is one of their main problems; 10.1 percent consider it to be the low availability of labor, 7 percent mentioned insecurity, and 4.1 percent mentioned the regulatory and tax framework, the BdeM added.