Latin America places three countries among the top five of those that from 2022 to 2023 had the highest rates for SMEs among the members of the Organization for Economic Cooperation and Development, OECD, as revealed by the 'SME Financing' study. and entrepreneurs 2024'.
The increase in interest rates by country was evaluated as a result of the high post-pandemic inflation, and how this affected small and medium-sized companies. It was found that there was a greater increase during 2022 compared to 2021, and The country with the greatest variation was Colombia with nine pp, then Hungary (7.5 pp), Brazil (5.8 pp), Chile (4.8 pp) and Kazakhstan (4.3 pp).
In this way, at the end of 2022, the countries with the highest interest rates for SMEs were Peru with 27.05%, Brazil with 23.74% and Colombia 21.83%, and then, outside of Latin America, Kazakhstan with 17.20%, and Ukraine with rates at 15.14%.
The innovation and entrepreneurship consultant, Frank Prieto, explains that although at this moment they are higher than he is used to, “In general, SMEs are lent at quite high rates compared to large companies, so it is more of a structural issue than a temporary one,” andThis is reflected in the study considering that the largest gap between the rates for SMEs and large companies occurred in the countries of the region during 2022.
The professor at the Javeriana University and specialist in business valuation, Julio Sarmiento, points out that there is a credit restriction for smaller companies, because Larger companies tend to be more leveraged and this is a common factor in most financial markets.
“When the appetite for risk decreases because rates are high, those who hurt the most are small businesses, and not in a general way throughout the world, but small companies in more developed countries will have more access to credit because, among others, government credit lines are usually more active, than when the market does not want to take risks, who takes it It is the State.”
This is why at the other end of the rate ranking, The lowest rates for this segment are found in countries located in areas with extensive development and financial strength such as Luxembourg (1.73%), France (1.90%), Belgium (2.06%), Austria (2.08%) and Switzerland (2.56%).
“In Latin America, if we compare ourselves to developed countries, we have a weaker financing ecosystem. The most developed OECD countries have an advantage and that is that these financing ecosystems allow, for example, strong factoring and confirming systems.”
The teacher explains that when you have a more developed financing ecosystem, “you almost don't feel that operating cycle,” because There are already quite robust financing mechanisms that allow, for example, to easily discount invoices, so they do not need to request more developed credits.
Therefore, it is worth noting that in the case of Colombia, despite the high rates, it is also ranked as the third country, among the data compiled by the OECD, with the highest loan requests by SMEs, which, of course, According to Sarmiento, It could be explained that the less developed the country's financial system is, the fewer pre-established financing mechanisms it will have. Therefore, SMEs have the need to request more loans, even if they have high rate conditions.
“The problem is often not that companies cannot grow, but rather that they cannot remain in the market. In the chambers of commerce it is seen that “Small businesses tend to die more in times of high rates due to not being able to get money to finance their operating cycle,” added the teacher.
Rate difference for large companies
Among the countries that provided differential data on loan interest rates by company size, those with the widest difference were Peru with a difference of 19.85 pp, Colombia with 7.91 pp, Brazil with 7.66 pp, Chile with 4.00, and Mexico with 3.58 pp
“In general, financial statements are not used to lend to SMEs, information from the owners who generally do not have large capital is used, so the rates are usually high,” explained consultant Frank Prieto.
