The IMF has estimated that nearly three-quarters of euro zone banks need to significantly change their business models if they are to meet the demand for credit.
According to the IMF, even without the legacy of bad debt, new international regulations make it more expensive to lend money, and banks have been reluctant to take on more risk while the ECB audits and stress tests their balance sheets this year.
Although the ECB funding is cheap, making fresh loans still requires banks to find additional capital, which they may not be willing to do.
In Greece, some small companies are being offered borrowing rates at up to four times the average cost of borrowing in the euro zone.
"We have been facing borrowing rates of 8 to 11%, which is tough for a small business to swallow," said Vassilis Korkidis of Greece's Confederation of Hellenic Commerce. "As a result, some are simply avoiding bank borrowing".
"About eight out of 10 loan applications are being turned down. Banks ask for guarantees, collateral that far exceeds the amount of money they are willing to lend".
In the meantime, around 130,000 small and medium-sized firms have closed in Greece since the onset of the financial crisis.
Part of the problem for banks in Greece, Spain and Italy is that they still face a higher cost of funding to peers in northern Europe whose economies and governments are seen as more creditworthy.
Europe's stress tests are meant to help lower banks' cost of funding by ensuring that lenders that are not adequately protected against future losses are either be reinforced, restructured or shut down, thus reassuring investors. But the reluctance to lend may persist even after the tests.