Business, Management and Accounting
3 years ago

Trade credit eases bank finance access for small businesses in Portugal and Spain.

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SSRN Electronic Journal
Does Trade Credit Facilitate Access to Bank Finance? An Empirical Evidence from Portuguese and Spanish Small Medium Size Enterprises
Ana Paula Matias Gama, Cesário Mateus, Andréia Teixeira

Paper Summary

Trade credit can help small and medium-sized businesses access bank loans, but it's not a perfect solution. A study of Portuguese and Spanish companies found that some firms struggle to get bank financing, leading to credit rationing. This is especially true for companies that only work with one bank, suggesting they face more challenges in getting loans. However, trade credit can both replace and work alongside bank loans, especially for newer and smaller businesses.

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