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Small and medium-sized enterprises (SMEs) are a foundational element of the European Union’s economy. As formally recognized by the European Commission, SMEs constitute the core of Europe’s productive and employment base, making their financial health a matter of systemic economic relevance.  According to the European Parliament, in 2025 the EU was home to approximately 26.1 million SMEs, which together provided employment for more than 89.8 million people. In labor market terms, this represents close to half of all employed EU citizens: Statista data indicate that total employment in the European Union reached 201.9 million people in the second quarter of 2025. Beyond employment, SMEs also define the structure of the European business landscape. European Commission data show that SMEs account for 99% of all businesses in the EU and generate more than half of total value added in the non-financial economy. Yet despite this critical role, access to financing for SMEs is becoming increasingly constrained. Persistent underfinancing limits their ability to sustain operations, invest in growth, and manage liquidity. Over time, this weakens income generation, reduces tax contributions, and ultimately affects household purchasing power through its impact on employment stability and wage growth. This dynamic reflects not a temporary distortion in SME credit markets, but a structural realignment. Traditional banking models weren’t designed to accommodate the speed, granularity, and short-term liquidity requirements that characterize modern SMEs, leaving a growing share of financing needs insufficiently served by conventional credit channels. Why Traditional SME Lending Is Under Pressure SMEs continue to struggle to access bank financing as lenders apply stricter credit standards, extend approval timelines, and limit flexibility—a trend that has intensified over recent years. A notable tightening occurred in Q4 2024, when 9 percent of banks reported stricter credit conditions for SME loans. This trend persisted into 2025: in early 2025,…

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Filed under: News - @ January 12, 2026 10:29 am