Lending to Serbian small and medium-sized enterprises increased in 2024, but their share of corporate credit declined as larger companies expanded borrowing more rapidly and secured financing at lower interest rates. Outstanding SME loans rose 7.3% to €9.28 billion, while new lending to the segment increased 17.7% to €6.34 billion, according to OECD data. Despite the growth, SMEs accounted for 31.9% of new corporate lending, down from 35.6% a year earlier. Their share of outstanding business loans also declined to 26.1% from 27.1%.
Interest-rate gap widens between company sizes
Foreign-currency SME borrowing costs remained at around 6.7%, while rates available to large companies fell to approximately 5.0%. The resulting financing spread widened to 1.71 percentage points, compared with 0.52 percentage points one year earlier. For an SME financing a €1 million investment, the difference can represent tens of thousands of euros in additional annual financing costs compared with a larger corporate borrower.
Smaller businesses also have fewer financing alternatives. Large companies can negotiate with several banks, obtain parent-company support or use international financing structures, while SMEs remain more reliant on domestic commercial banks and leasing.
SME credit quality improves
Access to financing nevertheless showed improvement during the period. The SME loan rejection rate fell to 9.7% from 19.2%, indicating that a larger proportion of applications were being approved. At the same time, non-performing SME loans declined to 3.0%, strengthening the segment’s credit profile. The improvement in asset quality comes as SMEs continue to face higher financing costs than large corporates. Differences in lending scale, collateral, transaction volumes and administrative costs contribute to the pricing structure of smaller-business loans.
Large borrowers can provide larger transaction volumes and stronger collateral packages, while competition among banks for major corporate clients can put additional pressure on lending margins. SMEs often face higher documentation and monitoring costs relative to loan size and may depend more heavily on owner guarantees and conventional collateral.
Investment needs increase financing pressure
The financing differential is becoming more relevant as Serbian companies invest in automation, digitalisation, energy efficiency and compliance with EU market requirements. Manufacturers exporting to the EU increasingly need investment in cleaner production, energy systems, data management, traceability and new equipment. Higher borrowing costs can therefore affect the financing of projects required to modernise production and maintain competitiveness in export markets.
EU-backed programmes target smaller companies
The OECD data also highlight the role of development-bank programmes delivered through Serbian commercial banks. Financing facilities supported 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. Although these programmes are smaller than Serbia’s overall banking market, they can reduce effective financing costs, extend maturities and support investments that might otherwise be postponed.
Banks face expanding SME credit demand
For Serbian banks, the combination of stronger SME lending, lower rejection rates and improving loan quality creates further scope for credit expansion. The SME market is also becoming more relevant to competition over financing conditions, including interest rates, maturities and investment-oriented lending rather than short-term liquidity alone. SME lending therefore continues to expand in absolute terms, while larger companies are capturing a greater share of new corporate credit and accessing financing at lower rates.
