EURIBOR rising — yes or no, and what it means for small and medium businesses

EURIBOR (Euro Interbank Offered Rate) is the interest rate at which European banks lend to each other. Most corporate and business loans in Serbia are indexed to EURIBOR plus a bank margin. This means that every change in EURIBOR arrives directly on your bank statement — without notice and without negotiation.

A short historical context

After a long period of negative and near-zero values, EURIBOR has, in recent years, gone through the sharpest rise in its history. The 3-month EURIBOR moved from below zero to values above 3.5% at times, before later stabilising.

The trend is not one-directional. The European Central Bank reacts to inflation, economic growth and geopolitical shocks. The assumption that rates will "always come down" is just as dangerous as the assumption that they "must stay where they are".

What this means for your company

If you have a EUR 500,000 loan with a variable rate of EURIBOR + 3%, a 200 basis-point rise in EURIBOR translates into roughly EUR 10,000 in additional interest per year. For most SMEs that is the difference between a project going ahead and a project being postponed.

Three concrete moves that make sense now

1. Inventory of existing loans. Build a single table with all loans, remaining principal, rate type (fixed/variable), current effective rate and final maturity. It is surprising how many owners do not have this overview.

2. Talk to your bank. If you are currently paying a high margin, it is worth opening a conversation with the bank about restructuring — especially if your business metrics have improved since the loan was approved.

3. Consider a fixed rate. Some banks offer to convert a variable loan into a fixed one for the remaining term. It is not free (the fee is typically 0.5–1%), but in times of uncertainty it can be a form of insurance.

What NOT to do

Do not make a conversion or refinancing decision based only on a rate forecast. Nobody knows with certainty where EURIBOR is heading over the next 12 months. The decision has to be based on your risk tolerance and cash-flow stability — not on a market prediction.

If you would like us to go through your current loan portfolio and analyse the options — get in touch. This is one of the most common reasons for a first conversation with us.