Interest rates reached an all-time low on Krea's platform despite recent rate increases in capital markets
Interest rates in the capital markets have been on the rise recently which was reinforced on the 28th of April by the Swedish central bank’s decision to increase their repo rate. However, a recent analysis of 30 000 loan offers on Krea’s financing marketplace shows that interest rates selected by customers on the marketplace have never been lower than during the first months of 2022. The positive impact of higher transparency of loan terms in small business financing markets outweigh the short-term impact from increased repo rates. The rates on Krea’s platform are also supported by a short-term effect of lower funding costs for lenders with bank licenses that have reduced saving account rates as consumers have re-allocated investments to cash savings accounts.
In April, the Swedish central bank decided to increase their repo rate by 25 basis points. This will eventually lead to higher funding costs for banks. However, in the short-term there is no effect visible for small business financing markets in Sweden. An analysis of 30 000 loan offers on Krea’s financing marketplace shows that interest rates selected by customers on the marketplace have never been lower than during the first months of 2022. The average rate at which a company finances their business on Krea has decreased by 60% since August 2019.
Average selected interest rate
Indexed to 100% in Q3 2019
Interest rates selected by customers on Krea’s financing marketplace have been improving over a longer period of time. Higher transparency of loan terms have made it possible for small businesses to select increasingly attractive loan offers.
“We have seen a gradual but clear trend towards better loan terms for small businesses in Sweden. This is partly driven by SMEs becoming more selective in what loan offers to accept, but also by improvements in the underlying financing market. Several lenders connected to Krea’s marketplace have received bank licenses which reduces their funding costs. Also, increased transparency about loan terms from marketplaces like Krea helps to support the positive development” says Carsten Leth, Chief Commercial Officer at Krea
In addition to higher transparency, there are also an increasing number of lenders and more lenders with bank licenses active on Krea. SME lenders that rely on deposits have also seen a short-term effect of lower funding costs. As consumers have re-allocated investments from stocks to cash savings accounts, they received a higher inflow of capital and could reduce interest rates for their savings accounts. However, this effect is likely to be short-lived and rates will eventually increase. This will in turn lead to higher funding costs for lenders, which will result in increased loan costs for small businesses.
There seems to be a current window of opportunity for SMEs to secure financing with a fixed rate for up to 5 years.
For more information
Carsten Leth
Chief Commercial Officer
Mobile: 0727196659
E-mail: carsten.leth@krea.se
About Krea
Krea is the natural place for small businesses to realize their growth potential by getting instant access to the best credit.
Krea’s digital comparison platform makes it easy for SMEs to find credit to the best possible terms. We have supported more than 20 000 Swedish companies to find financing by providing a market comparison of 25+ lenders. The service is digital and enables companies to find, compare and close financing up to 30 million SEK without hassle.
