The loan crunch is a very serious phenomenon for the economy, which cuts access to loans and financing for families and businesses.
This is one of the main consequences of the 2008 financial crisis, born in the banking sector and then expanding in all other fields of the economy. Italy has suffered more than other countries from these financial dynamics due to some features of its economic system, which make it particularly dependent on banks. Let’s find out specifically what the loan crunch is .
The loan crunch occurs when banks, placed under stress, are not in a position to lend money to businesses or families . In this way the liquidity crisis, as happened in the years immediately after 2008, expands very rapidly, for two reasons: on the one hand, companies do not invest and cut jobs , failing to obtain loan; on the other hand, families reduce consumption . This generates a vicious circle that can cause an economic crisis. When the condition of the banks improves, it is not certain that the loan will return to flow as before.
At that point, in fact, the loan situation of many debtors could have deteriorated a lot. When a bank grants a loan, it always checks the loanworthiness and the guarantees of the applicants. Given the widespread economic difficulty, many families and businesses are unable to meet these criteria and therefore the loan crunch continues. Moreover, after the financial crisis, new international regulations came into force that oblige banks to maintain healthier financial statements in order to avoid a new collapse. However, precisely because of these new rules, the banks have further tightened controls on the debtors’ situation.
How to avoid this situation?
Many institutions have provided special solutions for those who have more difficulty in presenting a pay slip or a solid economic situation, precisely because of the loan crunch. Thus, loans without pay slips have proliferated, with the proposal of alternative guarantees such as a pledge or the signature of a third party, or fast loans, which guarantee small amounts in a fairly short time. We must not forget subsidized loans thanks to public guarantees or loans specifically designed for businesses .