Serbian entrepreneurs had the highest proportion of overdue bank-credit obligations among the borrower categories monitored by the Association of Serbian Banks (UBS) at the end of October, with arrears accounting for 3.3% of their outstanding loans. The corresponding figures stood at 2.3% for legal entities and 1.1% for households, according to the UBS credit report.
Different Criteria for Measuring Loan Arrears
The figures require consideration of the different reporting thresholds applied to each borrower group. Under UBS definitions, loans are classified as overdue after more than 15 days for entrepreneurs and companies, while the threshold for households is more than 60 days.
This difference means that the reported arrears percentages are not directly comparable as measures of default risk. The shorter reporting period for businesses can result in a higher recorded share of overdue obligations without necessarily indicating weaker overall repayment performance.
Liquidity Pressures on Smaller Businesses
Entrepreneurs frequently depend on a relatively small customer base and have less financial capacity to absorb delayed payments for delivered goods and services. Consequently, working-capital loans, overdrafts and supplier credit can be particularly important for maintaining daily operations, compared with longer-term investment financing.
The October report does not specify which industries or individual businesses account for the overdue amounts, leaving the sectoral distribution of arrears unclear.
Export Growth and Uneven Business Conditions
Serbia’s broader economic environment presents mixed conditions for smaller companies. Goods exports increased by 8.9% in euro terms during the first nine months of 2026, according to the Statistical Office of the Republic of Serbia.
Export growth does not translate into uniform business conditions across the economy. Smaller companies outside export supply chains, particularly domestic service providers and subcontractors, may experience substantially different cash-flow conditions from those of large multinational manufacturers.
Banks Focus on Working-Capital Risks
Assessing lending risks among entrepreneurs requires banks to distinguish temporary payment delays from more persistent liquidity shortages. Relevant indicators include customer concentration, contractual payment terms, tax liabilities, short-term debt refinancing requirements, and exposure to changes in energy and imported raw-material prices.
Outstanding loan balances alone provide limited information about these risks, making a closer examination of individual businesses’ cash flows important when evaluating repayment capacity.
Despite the higher arrears share among entrepreneurs, the overall quality of Serbia’s bank loan portfolio improved. The aggregate overdue-loan ratio declined to 1.8% in October, compared with 2.0% in the same period a year earlier.
