Athens, Greece. Long-running disputes over non-performing loans from Greece’s debt crisis are continuing to restrict access to credit for 1.5 million people, including many small business owners, according to borrowers, officials and experts. Although Greece’s economy has recovered strongly, unresolved debt cases remain a barrier to borrowing and investment.
Business owners face prolonged debt cases
When Greece’s debt crisis hit in 2009, George, the owner of a jewellery shop outside Athens, took on a new 100,000 euro loan as his business turnover fell sharply.
After the Greek financial sector collapsed, the loan was transferred between banks before ending up with a credit servicing company that rejected his request to repay it in smaller, more affordable instalments. The case went to court and remains unresolved in a legal system burdened by hundreds of thousands of similar disputes.
While the case is pending, the debt has doubled because of unpaid interest. George, who asked Reuters not to use his full name out of concern it could affect his situation, said the debt has left him unable to take out a new loan, invest in his business or obtain a credit card.
Credit access remains restricted despite economic recovery
Greece has rebounded strongly from the crisis in recent years, with growth now exceeding the European Union average. However, eight borrowers and six government officials and experts said a large stock of unresolved non-performing loans is quietly limiting a fuller recovery because borrowers cannot access new credit until old debts are settled.
Government and servicing company data show that 1.5 million citizens, nearly a quarter of the adult population, remain excluded from the banking system. Almost half of them are small business owners.
Some 75 billion euros, close to one-third of Greece’s gross domestic product, is tied up because of legal disputes or delays in settlements by loan servicers.
Government cites reforms to speed up resolutions
Nana Papadogeorgaki, a lawyer representing dozens of small business owners, said broad access to financing is necessary for sustainable economic growth.
The justice ministry told Reuters that a recent civil code reform and the hiring of 1,000 additional judges have significantly reduced court processing times. It said cases now take an average of 315 days to resolve, down from 1,200 days two years ago, and that the outstanding loans are expected to be settled by 2028.