Economy: Finding the right funding


Although the banking sector has reduced its lending activity due to the deteriorating business environment, some Hungarian banks are still willing to provide financing to SMEs. However, with only one out of five Hungarian SMEs creditworthy, the rest are left to rely on state-subsidized programs.

There is no economic development without small- and medium-sized businesses (SMEs), as this sector plays a vital role in both employment and contribution to GDP. However, SMEs cannot develop without access to financing.

Besides bank loans and leasing constructions, options include capital and mezzanine financing as well as various subsidies. Unfortunately, only about 20% of Hungarian SMEs are creditworthy, compared to 70-85% in western Europe. 

Some banks are still willing to finance SMEs, but the extraordinary bank tax, the new FX loan repayment scheme and Hungary’s image in the region all work against banks’ lending activity, Erika Marsi, vice president of the International Training Center for Bankers, recently said at’s SME financing conference. She believes that the situation could be managed by state guarantees and simplified constructions. 

Marsi expects new developments in bank financing, such as the introduction of new scoring systems (which also include behavior scoring), and stricter monitoring. Sectoral risks will be paid more attention, and certain areas, such as the construction industry, might be blacklisted. 

The good news is that previous margin levels and charges are expected to decrease somewhat, Citibank regional manager Szilvia Danka said. Tailor-made constructions will be preferred to standardized products. Banks now seek a closer and longer-term relationship with their clients as well as a deeper understanding of their businesses. Unsecured lending will decrease; banks now require solid collateral, such as real estate or guarantees. 

Both the amount and duration of loans granted to SMEs is decreasing, Marsi pointed out. The stock of SME loans dropped 7.4% year on year by the end of June and the loan portfolio also deteriorated. For instance, of the 40,000 loans given to small- and microenterprises, 32,000 are problem loans. “It is time to introduce reorganizational schemes for these businesses,” she stressed. 


Századvég raises GDP forecast to 7.8% Analysis

Századvég raises GDP forecast to 7.8%

Opposition parties to begin PM candidate primaries Elections

Opposition parties to begin PM candidate primaries

Tungsram switches to hybrid work HR

Tungsram switches to hybrid work

Budapest leaders make public transport free for under-14s City

Budapest leaders make public transport free for under-14s


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.