"If we don't get any more credit we'll have to cut jobs or close the company," said Massimo Pelizza, financial director at SO.CO.TEC, a family-owned firm that produces water, heating and air conditioning systems. The company, which employs 120 people, is doing well on the surface. It estimates its turnover will rise this year to some 20 million euros ($27 million) from around four million euros in 2008. But SO.CO.TEC has just been turned down for a 400,000-euro loan that it needed to expand. "We want to grow to create jobs," Pelizza said in his office in Lentate sul Seveso, some 30 kilometres (20 miles) north of Italy's commercial hub. Research by the Bank of Italy and business daily Il Sole 24 Ore showed that the percentage of employers experiencing difficulties in obtaining credit rose last month to 28.6 percent from to 15.2 percent in June. OMV Ventura -- a steel tube manufacturer that is also based near Milan and employs 45 people -- is in a similar bind. "Since the start of the September, we have been seeing a major change in the attitude of banks that want to reduce their risks," said managing director Nicola Vernaglione. OMV Ventura obtained a 1.5-million-euro loan in June for purchasing raw materials but Vernaglione said he had been told by one bank that it would only provide a loan now by "dividing the risk" with other banks. Any new loan requests by businesses "will be very difficult," he said, warning that the problem would hit hard at the end of the year when banks review their credit lines. "It's a bit like a snake biting its tail" since tightening of credit would worsen the economic situation even further, he added. Experts say Italian businesses are getting hit by the banks as a knock-on effect of the market jitters of recent months over the country's strained public finances and efforts to stabilise them. "Banks have increased their risk premiums since Italian debt, to which they are very exposed, is considered more risky," said Giuliano Noci, a professor at Milan Polytechnic University's MIP business school. "They therefore have higher refinancing costs which is causing a lack of liquidity," he added. Underlining the gravity of the situation, the director general of the Confindustria employers' federation, Gianpaolo Galli, warned earlier this month that the "tsunami alarm" of a credit crunch had sounded. Giovanni Sabatini, director of the Association of Italian Banks, said that if the costs of refinancing remain high, "this will inevitably be reflected on the financing given to companies." According to the latest figures, the number of loans given to the private sector actually increased by 4.0 percent in August from July but the figure marks a slowdown compared to preceding months. Businessmen blame the economic situation but also a government whose shaky credibility on international markets has precipitated the sharp rise in the risk premium for Italy. "I don't know a single businessman who doesn't have an extremely negative view" on the government, Vernaglione said.