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The credit crunch has been tougher for SMEs than for large companies, according to newly-compiled OECD data. The study, entitled Financing SMEs and Entrepreneurs: An OECD Scoreboard, has found that SMEs requesting loans between 2007 and 2010 faced higher interest rates than large companies. Loan conditions for SMEs included shortened maturities and increased demands for collateral. The report found that although interest on loans to SMEs trended downwards throughout the financial crisis, the interest rate spread between SMEs and large firms increased, including during the tentative recovery of 2010. The easier credit terms for large companies suggests that smaller firms were considered to be a higher risk with poorer business prospects. SMEs are crucial engines of economic growth, jobs and social cohesion. In many countries they represent around 99% of all firms. Access to finance remains one of the biggest challenges in the creation, survival and growth of small firms. Analysing data from 18 countries, the report has found that business loans to SMEs fell sharply during the recession and although they picked up somewhat in 2010, they generally failed to reach their 2007 levels. Venture and growth capital also suffered a big drop during the period studied. The fall in demand for goods and services during the crisis, combined with tighter credit conditions, hit the cashflow and liquidity of SMEs hard, resulting in increased payment delays. Many firms were forced into bankruptcy, contributing to continuing high levels of unemployment in many regions. To read the full report, visit www.oecd.org. Other Business Money News
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