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Small and Medium-sized Enterprises (SMEs) are crucial to the Belgian economy, representing 99.9% of all enterprises and employing over 1.1 million individuals. Despite their importance, SMEs often struggle with financing, a challenge worsened by the Covid-19 pandemic. In response to these challenges, the Belgian Government has launched various policy initiatives at both federal and regional levels. One such measure, implemented in the Walloon region, is the “Ricochet-recovery” loan, distinguished by its 0% interest rate, making it an appealing option for businesses seeking financial support.

This study investigates the impact of the “Ricochet-recovery” loan on the credit spreads and financial health of Belgian SMEs. By utilising a dataset of 9,263 SMEs from 2017 to 2022, the research employs a Difference-in-Differences (DiD) approach to compare financial outcomes between eligible and non-eligible firms. The findings indicate that the loan policy significantly reduced credit spreads for eligible SMEs, suggesting improved creditworthiness and lower borrowing costs. Additionally, the study highlights enhanced financial access for eligible firms, both before and after the policy enactment.

These results demonstrate the effectiveness of targeted financial interventions in supporting SMEs during economic downturns. Policymakers can use these insights to design future policies that ensure SMEs receive necessary support, maintaining financial stability and fostering a resilient economic environment.

SMEs --- Covid-19 pandemic --- Ricochet-recovery loan --- Credit spreads --- Financial health --- Government-backed loans --- Difference-in-Differences (DiD) approach --- Sciences économiques & de gestion > Méthodes quantitatives en économie & gestion