Greece’s economic recovery is being slowed down by a million vintage loans. Many small business owners, like George, who owns a jewelry shop outside Athens, are struggling to repay their debts. George’s debt has doubled due to unpaid interest, and he is unable to take out a new loan to pay off the old one.

Outstanding Loans Hamper Economic Growth

Greece has rebounded strongly from the crisis in recent years, with its growth now outstripping the EU average. However, the outstanding non-performing loans are quietly hampering a full recovery. Would-be homeowners or businesses cannot borrow again until the old loans are settled, which could take years.

According to data from the government and service companies, 1.5 million citizens, almost a quarter of the adult population, are still shut out of the banking system. Nearly half of these individuals are small business owners. The justice ministry has implemented a recent reform of the civil code and hired 1,000 more judges to cut processing times significantly.

Delays in Settling Loans

Despite the efforts to reform the system, the service companies that restructure loans and liquidate real estate collateral are still facing huge delays. The Hellenic Loan Servicers Association says that the system is at fault, and the inconsistent and conflicting rulings are significantly impacting the settlement of bad loans.

Business owners are struggling to repay their debts, and many are resorting to the courts. Theoni Alambasi, general secretary of private debt in the finance ministry, says that the use of real estate assets as collateral is one of the biggest problems for the quick settlement of bad loans.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.