Turned down for a 10,000 euro ($11,100) loan, George Sarris is one of hundreds of thousands of small business owners shunned by Greek banks.

Pointing to the parliament building overlooking his small cafe in Athens' Syntagma Square, the 35-year-old blames Greece's turbulent politics for the troubles of its banking system.

"It took three years for the country to come close to turning around," said Sarris, referring to modest economic growth in the second half of 2014, which has since halted.

"After the January 25 elections it all went downhill. Now things are bleak. For me, there is no salvation here."

This is the background against which Greeks head to the polls again on Sept. 20, the country's fifth elections since its debt crisis started in 2009. The snap poll was triggered by the resignation of leftist Prime Minister Alexis Tsipras, whose agreement to an 86 billion euro bailout cost him the parliamentary majority of his coalition government.

Six months of wrangling with creditors had led to a 40 billion euro deposit run, culminating in Greek banks being shut and capital controls enforced at the end of June.

Greek banks were badly wounded and limited the little lending they did even further, fearful about their exposure to loans many borrowers may never be able to pay back.

This fear of a rise in so-called non-performing loans (NPLs) is a deterrent not only to the banks, but also to potential investors whose money is needed to recapitalise them.

While banks have reopened and capital controls have somewhat eased, small business owners such as Sarris, who account for about 75 percent of private sector jobs, are starved of credit.

"All our suppliers have stopped accepting credit. Everyone is short on cash. I still pay salaries, but I'm behind on my taxes...My business is down 35 percent this year and I don't want to lose more customers," said Sarris. The immediate outlook for Greece is equally bleak.

Along with its lenders, Athens expects gross domestic product to contract 2.3 percent this year and another 1.3 percent next year before the economy bounces back. These projections are in the ECB's baseline scenario in a health check of Greek banks, a banker with knowledge of the matter said.

The deal struck by Tsipras includes a recapitalisation of the banks. However, interviews with some of the sector's top executives, as well as international investors, suggest this will not be sufficient on its own to kick start lending.

"The economy's return to growth and its funding from the banking system will be affected by a number of factors, including political stability, the implementation of bailout reforms, a successful conclusion of the first review in October and the completion of banks' recapitalisation with private investor participation," Fokion Karavias, Chief Executive of Eurobank, one of Greece's top four banks, said.

The banks' needs will be known once asset quality reviews, currently underway, and subsequent "stress tests", are completed, likely by the end of October. The latest bailout, the country's third, allocates up to 25 billion euros for bank recapitalisation, although bank insiders say the figure is more likely to be in the 10 billion to 15 billion euro range.

Bank executives who spoke to Reuters on condition of anonymity also say there is likely to be little difference in the health of the four top lenders - National Bank of Greece, Alpha Bank, Eurobank and Piraeus Bank - although National Bank is seen as somewhat stronger because it has assets in the Balkans and Turkey. But convincing private investors to put their money into the banks will be a major test of confidence.