Serbia’s small and medium-sized companies are borrowing more, but they are capturing a declining share of the country’s expanding corporate credit market and paying a widening interest-rate premium over large businesses, according to new OECD data.
Outstanding loans to Serbian SMEs increased 7.3% to €9.28 billion in 2024, while new lending to the segment jumped 17.7% to €6.34 billion.
Despite that growth, SMEs accounted for only 31.9% of new corporate lending, down from 35.6% a year earlier. Their share of outstanding business loans also slipped to 26.1% from 27.1%.
The figures point to an increasingly two-speed corporate financing market.
Credit conditions for smaller Serbian businesses have improved in absolute terms. Banks are approving more applications, credit quality is strengthening and lending volumes are growing.
But large corporates are expanding their borrowing even faster and securing financing at significantly lower rates.
Average borrowing costs on foreign-currency SME loans remained around 6.7%, while rates available to large companies declined to about 5.0%.
That pushed the financing gap between the two groups to 1.71 percentage points, more than three times the 0.52-point spread recorded a year earlier.
For an SME financing a €1 million investment, that difference can translate into tens of thousands of euros of additional annual financing costs compared with a larger corporate borrower.
The divergence matters because SMEs account for a substantial part of Serbia’s employment, domestic supplier base and investment pipeline but typically have fewer financing alternatives.
Large companies can often negotiate directly with several banks, secure parent-company support or access international financing structures. Smaller businesses remain much more dependent on domestic commercial bank credit and leasing.
There are positive signals.
The SME loan rejection rate fell sharply to 9.7% from 19.2%, suggesting that businesses are finding it easier to obtain credit.
At the same time, non-performing SME loans declined to 3.0%, strengthening the sector’s credit profile and reducing one of the traditional arguments for charging smaller companies substantially higher risk premiums.
The combination creates an important question for Serbia’s banking market: why is the financing-price gap widening when SME asset quality is improving?
Part of the explanation lies in scale.
Large companies can offer stronger collateral packages, larger transaction volumes and lower administrative costs per euro lent. Competition among banks for major corporate customers can also compress margins more quickly than in fragmented SME lending.
Smaller companies face higher documentation, monitoring and transaction costs relative to loan size, while many still depend heavily on owner guarantees and conventional collateral.
The gap nevertheless risks becoming more significant as Serbian companies enter another investment cycle driven by automation, digitalisation, energy efficiency and compliance with EU market requirements.
Many of those investments are difficult to postpone.
Manufacturers exporting to the EU increasingly need to invest in cleaner production, energy systems, data management, traceability and new equipment. Higher financing costs can therefore directly affect their ability to remain competitive.
The OECD figures also help explain the growing importance of development-bank programmes being channelled through Serbian commercial banks.
New financing facilities backed by the European Investment Bank and the EU increasingly combine preferential lending, leasing and grants for SMEs investing in green technology, digitalisation, innovation and employment.
Those programmes are relatively small compared with Serbia’s overall banking system, but their role becomes more important when the commercial financing gap between SMEs and large companies widens.
They can reduce effective borrowing costs, extend maturities and make investments bankable that might otherwise be delayed.
For Serbian banks, the opportunity is also significant.
A healthier SME loan portfolio, falling rejection rates and rising demand suggest that smaller companies can support further credit growth without necessarily producing a corresponding increase in bad loans.
But banks will increasingly compete not only on whether financing is available, but on its price, maturity and ability to support investment rather than short-term liquidity.
Serbia’s SME credit market is therefore expanding, but the headline growth masks an important imbalance.
Smaller companies are borrowing more and defaulting less, yet large corporates are gaining an increasing share of available business credit and benefiting from cheaper money.
If that spread persists, the main financing constraint for Serbia’s SMEs may no longer be access to bank credit itself. It may increasingly be the price of the capital needed to modernise.
