This paper investigates the impact of bank-firm relationships on loan rates and collateral pledging for very small firms in a European bank-based system. Using data from nearly 18,000 loans granted to over 13,000 firms, the study finds that the length of a bank-firm relationship increases the loan rate. However, the intensity of the relationship, measured by the purchase of other information-sensitive products, decreases the loan rate. The results suggest that the effect on loan rates is more related to the depth of the relationship rather than its duration. Additionally, the probability of pledging collateral slightly decreases with the length of the relationship. The study also finds that the private information component of the relationship has a stronger influence on interest rates than public information. The paper contributes to the literature on relationship lending by providing empirical evidence on the effects of bank-firm relationships on loan pricing and collateral decisions in a bank-dominated financial system. The findings highlight the importance of relationship lending in the European banking system for small businesses.This paper investigates the impact of bank-firm relationships on loan rates and collateral pledging for very small firms in a European bank-based system. Using data from nearly 18,000 loans granted to over 13,000 firms, the study finds that the length of a bank-firm relationship increases the loan rate. However, the intensity of the relationship, measured by the purchase of other information-sensitive products, decreases the loan rate. The results suggest that the effect on loan rates is more related to the depth of the relationship rather than its duration. Additionally, the probability of pledging collateral slightly decreases with the length of the relationship. The study also finds that the private information component of the relationship has a stronger influence on interest rates than public information. The paper contributes to the literature on relationship lending by providing empirical evidence on the effects of bank-firm relationships on loan pricing and collateral decisions in a bank-dominated financial system. The findings highlight the importance of relationship lending in the European banking system for small businesses.