French bank Societe Generale said Tuesday it was unblocking 2 billion euros in low-cost loans for small business as the European Central Bank began a programme to boost lending amid struggling growth in the eurozone.
Societe Generale said 2 billion euros in 3- to 5-year loans of between 10,000 and 1 million euros was available to small and medium-sized businesses at advantageous interest rates of between 1.15 and 1.75 percent through the end of the year.
"This is to ensure that companies don't feel like they have difficulties obtaining finance," said deputy chief executive Bernardo Sanchez-Incera, who is in charge of retail banking operations.
Low lending rates to businesses have been one of the most vexing issues holding back the recovery in the eurozone, where bank loans are the key source for financing companies.
Firms have complained that lending conditions have tightened, but banks assert that businesses aren't bothering to ask for loans.
The European Central Bank, which has previously flooded banks with cheap funds during the eurozone crisis, announced in June a new programme that specifically aims to provide them with money to lend on to companies.
European banks on Tuesday were able to ask for the first funds under the ECB's so-called targeted longer-term refinancing operations (TLTROs).
The ECB expects eurozone banks to request between 450 billion and 850 billion euros in each of the eight TLTROs, which given the central bank's current key lending rate will be available at an interest rate of 0.15 percent.
The result of the first TLTRO is to be announced on Thursday.
With eurozone growth sliding to zero in the second quarter and inflation slipping to dangerously low levels, the ECB announced at the beginning of September additional measures to boost the economy, including venturing towards quantitive easing with the purchase of asset-backed securities.