Euro area firms report further tightening in bank loan conditions in Q2 2026, ECB SAFE survey shows

Euro area firms experienced a further net tightening of bank lending conditions in the second quarter of 2026, according to the European Central Bank’s Survey on the Access to Finance of Enterprises (SAFE) released on 20 July 2026. A net 42% of firms reported an increase in interest rates on bank loans, up sharply from a net 26% in the previous quarter, the ECB said in its press release. The rise was observed across both small and medium-sized enterprises (SMEs) and large firms.

Firms also reported continued pressure on other terms. A net 31% noted increases in other financing costs such as charges, fees and commissions (down from 37% previously), while a net 10% reported higher collateral requirements (down from 14%). An indicator of overall bank financing conditions based on firms’ responses pointed to further tightening, driven primarily by SMEs amid rising borrowing costs, the full SAFE report stated.

Financing needs for bank loans edged up slightly, with a net 2% of firms reporting an increase (from 0% in the first quarter). Availability of bank loans remained broadly unchanged at a net -1% (compared with -3% previously). However, patterns diverged by size: availability rose for large firms (net 4%) but declined for SMEs (net -4%). The bank loan financing gap—an index of the difference between needs and availability—stood at a positive net 3%, slightly higher than the prior 2%.

The general economic outlook remained the main factor constraining external financing availability, cited by a net 29% of firms (up from 26%). Banks’ willingness to lend improved modestly (net 6%, up from 5%). Looking ahead, fewer firms expected the availability of external financing to deteriorate. Obstacles to obtaining bank loans stayed low at 5% of relevant firms.

On the demand side and firm performance, a net 9% of firms reported higher turnover, with large firms stronger (net 20%) than SMEs (net 3%). Profits continued to deteriorate for a net 16% of firms. Investment in fixed assets rose for a net 6% of firms. Firms used financing mainly for inventories/working capital (40%) and fixed investment (37%).

Firms expected more moderate increases over the next 12 months in selling prices (3.2%, down from 3.5%), non-labour input costs including energy (5.2%, down from 5.8%), and wages (2.5%, down from 2.8%), according to the ECB press release. Median inflation expectations held largely stable at 3.0% for one- and three-year horizons and edged up to 3.1% at the five-year horizon. A Reuters report noted these moderating price and wage expectations as evidence against strong second-round inflation effects from energy costs (Reuters).

The survey, the 39th round of SAFE, was conducted between 21 May and 26 June 2026 among 5,087 euro area enterprises, 92% of which were SMEs with fewer than 250 employees. Firms were asked about developments from April to June 2026. Ad hoc questions covered responses to the war in the Middle East—such as seeking alternative suppliers and energy efficiency investments—and planned financing for AI investments, which firms expect to fund mainly via internal funds (72%).

Detailed country data and series are available via the ECB Data Portal. The results provide a firm-side perspective on credit conditions complementary to the ECB’s bank lending survey.