Centre d’Etudes et de Recherches Appliquées à la Gestion

This research seeks to understand the influence of growth on credit constraint in European {SMEs}. It examines the roles of different types of growth (short-term versus medium-term and past versus future) on both entrepreneurs’ discouragement and bank denials for credit. The study was conducted on 58,043 Eurozone {SME} owners between 2015 and 2019. The use of three logit and one multinomial logit models reveals that growth has different influences, according to its dynamics: (1) medium-term past growth, considered as hard information, influences both discouragement and denial; (2) short-term past growth is not valued because of its ambiguous nature between soft and hard information; (3) future growth only influences the entrepreneurs’ ambitions to apply for a loan but does not affect credit denial because of its soft nature. This research therefore invites both bankers and entrepreneurs to simultaneously consider past short- and medium- term growth as well as growth ambitions in order to benefit from additional hard and soft information. This might facilitate financing decisions from both sides and thus limit credit constraint for {SMEs}.