LENDING to the small business sector fell again during the first three months of this year, as firms focused on paying down debt rather than expanding their business.
Latest figures from the Central Bank show lending to small and medium enterprises fell by €417m compared to the last three months of 2012. That is also a faster rate than had been seen in the previous year. In the three months to March 2012, the amount outstanding to SMEs fell by €217m.
The figures match anecdotal evidence from the banks, who have made clear many of the small firms they deal with are concentrating on reducing their debt burden rather than seeking new credit.
Even so, trade groups have said lenders are slowly beginning to loosen their purse strings after years of contraction.
A report from ISME earlier this week showed lending to the sector rose this year for the first time since 2009.
During the first quarter, some €464m in new lending was doled out to small firms, up from €407m in the same period in 2012.
The amount held on deposit by SMEs excluding the financial sector rose 1.6pc to €35.7bn during the quarter, up 2.5pc year on year.
The agriculture sector led the way, drawing down some €149m, while the retail & wholesale sector took up €92m in new lending.
Banking lobby group the Irish Banking Federation said the figures showed lending in the sector was growing over time.
"The average quarterly level of lending over the past year rose above €500m for the first time since Q1 2012.
"SME demand for new credit has been subdued, but there are some signs of uplift and banks have the capacity to match demand as it increases," the IBF added.