French Businesses Report Rising Borrowing Costs Despite Continued Access to Bank Loans

French businesses increasingly reported higher borrowing costs in the third quarter of 2026, even as most firms applying for investment loans continued to obtain the financing they sought. Some 41% of small and medium-sized enterprises (SMEs) said credit had become more expensive, along with 58% of mid-sized companies, the Banque de France reported on October 20.

The change was particularly pronounced among mid-sized businesses. In the second quarter, 24% of SMEs and 27% of mid-sized firms reported rising borrowing costs. By the third quarter, a majority of the latter group was reporting an increase. These figures describe what companies experienced or perceived, rather than a uniform rise in interest rates across all French borrowers.

Credit availability tells a different story. Among businesses that requested new investment loans, 96% of SMEs and 99% of mid-sized firms received either the full amount or more than three-quarters of the financing requested. The results suggest that securing a bank loan and being satisfied with its price have become increasingly separate questions for French companies.

More companies say the cost of credit has risen

The Banque de France’s third-quarter survey shows that perceptions of higher credit costs spread well beyond a small group of borrowers. Compared with the previous quarter, the rise was especially large for mid-sized firms, whose share reporting higher costs more than doubled. The proportion increased substantially among SMEs as well, reversing the earlier picture in which roughly three-quarters reported stable or lower costs.

Not every company saw a deterioration. In the latest survey, 58% of SMEs said borrowing costs had stayed the same or declined, as did 42% of mid-sized firms. But outright reductions were rare: only 1% of SMEs reported lower costs, and the figure was close to zero for mid-sized companies. Three months earlier, 6% and 7%, respectively, had reported a decrease.

The survey is a measure of firms’ reported experience, not a published average rate on new bank loans. That distinction is important when comparing it with the central bank’s separate monthly financing statistics. Those data showed the average interest rate on new bank borrowing by non-financial corporations falling to 3.66% in August from 3.75% in July. Even so, the August rate remained above the 3.39% recorded a year earlier.

The August decline appeared across company-size groups. The average cost of new borrowing was 3.71% for SMEs and firms of undetermined size, down from 3.75% in July. For mid-sized businesses, it fell to 3.74% from 3.86%. The monthly figures reflect the loans actually made and their interest rates, whereas the quarterly survey records companies’ assessment of whether credit became more or less costly.

Those measurements need not move together over every period. The survey covers July through September, while the latest monthly financing release available for this comparison covers August. Nor does an average rate establish the terms offered to any individual borrower. The central bank’s figures therefore support a narrower conclusion: more firms reported higher costs, even though the measured average rate on new bank loans declined between July and August.

Investment loans remain broadly accessible

The share of businesses seeking fresh investment financing edged down in the third quarter. New investment-loan applications came from 19% of SMEs, compared with 20% in the second quarter, and 26% of mid-sized firms, down from 28%. The declines were modest, but they followed a second quarter in which demand had increased slightly.

Approval outcomes remained strong among applicants. The 96% figure for SMEs was unchanged from the previous quarter, while the mid-sized-company rate increased from 98% to 99%. In both cases, the central bank counts applications as successful when the company obtains the full amount requested or more than 75% of it. These are not figures for loans granted in full, and they do not describe businesses that chose not to apply.

A more specific category, equipment financing, showed a less uniform result. SMEs secured all or more than three-quarters of the amount requested in 94% of applications, maintaining the previous quarter’s rate. For mid-sized firms, that share slipped to 90% from 93%. Equipment loans in the survey finance tangible and intangible fixed assets other than real estate, so their results do not exactly duplicate the broader investment-loan measure.

A drop in the proportion of firms applying for credit cannot, by itself, establish whether higher prices discouraged borrowing. Investment plans, use of existing cash and expectations about future conditions may also influence decisions, but the reported application and cost figures do not separate those possible explanations. What the survey does establish is that approvals remained high among the businesses that sought investment financing.

Short-term funding needs remain limited

Demand for new working-capital loans was relatively subdued. Only 7% of SMEs and 7% of mid-sized companies sought this type of borrowing in the third quarter. That represented a small increase from 6% for SMEs in the previous quarter, but a decline from 9% for mid-sized firms. Such loans typically address shorter-term cash needs rather than longer-term investment.

Banks met all or more than three-quarters of requested working-capital credit for 81% of SME applicants, down from 83% in the second quarter. The comparable rate for mid-sized businesses improved to 94% from 93%. Access was therefore more uneven in this category than for investment borrowing, particularly for SMEs, although the two measures cover different applications and should not be treated as identical groups of firms.

Existing credit lines are another part of the financing picture. More than one-third of SMEs and close to half of mid-sized firms had requested credit lines over the preceding 12 months, proportions the central bank said had been fairly steady for several quarters. At least 90% of applicants in each group received all or more than three-quarters of the facilities requested.

Among companies with access to these lines, 56% of SMEs drew on them during the third quarter, unchanged from the preceding three months. For mid-sized companies, usage reached 64%, up three percentage points. This matters when interpreting the low share applying for new working-capital loans: drawing on an existing credit facility is a different activity, and the survey excludes it from the measure of new loan applications.

Separate monthly figures offer some context for that restrained short-term demand. Outstanding bank investment loans to non-financial corporations were growing 4.5% year over year in August, while outstanding cash-flow loans were down 0.2%. Total outstanding bank credit to non-financial corporations grew 3.8% over the year, compared with 3.5% in July. These balance-sheet figures track the stock of lending, not whether individual applications were accepted.

The quarterly survey covers SMEs employing 10 to 249 people and mid-sized companies employing 250 to 4,999, provided they make their own borrowing decisions. Its findings exclude direct bond-market financing and do not measure the experience of every microbusiness or large corporation. The central bank also notes that the survey percentages are not seasonally adjusted. September’s monthly lending-rate data were not included in the August financing release, leaving the survey and the available rate series with different end dates.