Almost one in two businesses borrowing more than usual

A recent study finds that companies are having to borrow more money than usual to stay competitive.

A new survey from credit management company Intrum Oy finds that rises in prices and lending costs have hit companies hard. Almost half of companies are borrowing more money than usual this year to stay competitive.

Intrum’s European Payment Report 2023 finds that inflation is challenging companies’ growth. In Finland, 45% of companies say they are borrowing more.

Of the companies surveyed, 56% want to increase their turnover this year. However, 74% say their main aims in the current market situation are cutting costs and increasing efficiency. Almost one third (27%) of Finnish businesses say late payments are putting a brake on company growth.

The survey found that 58% of businesses have reduced their energy consumption, but also intend to keep it low in future for environmental reasons.

Yrittäjägallup survey: Almost half of businesses report weaker profitability

The results of the recent Yrittäjägallup survey by Suomen Yrittäjät, the Finnish SME association, also show that businesses’ expectations are lower.

“Businesses’ assessment of their own financial situation is now slightly weaker than last May. It seems that SMEs’ concerns have decreased as the energy crisis has eased, but at the same time companies feel the rise in interest rates,” Director and Chief Economist Juhana Brotherus says.

Just over half (54%) of businesses evaluate their financial situation as extremely or quite good. “Not good and not bad” was the assessment of 29%, while 17% said “quite bad” or “extremely bad”. The Yrittäjägallup survey found that the strongest situation was reported by businesses employing more than 10 people, and the weakest by single person businesses. Of the respondents, 44% reported weakening profitability.

“In addition, SMEs feel the impact of rising interest rates, as around 40% of SMEs have debts. From the point of view of future economic growth, delays to and cancellations of investments raise concern about the longer-term impact of the inflation spike on Finland’s economic growth. In companies which employ more than 10 people, in particular, inflation has led to cancellations of growth investments,” Brotherus says.

The Yrittäjägallup survey attracted responses from 1,041 SMEs between 18 and 28 April 2023. The confidence interval for the overall results is +/- 3.1 percentage points. The survey was conducted by Kantar Public Oy on behalf of Suomen Yrittäjät.

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