Half of all loans to small firms being denied, says ISME report
MORE than half of all loans to small businesses are being refused – and the situation is getting worse.
That is the verdict of the latest report into lending by industry lobby group ISME. According to its latest 'Quarterly Bank Watch Survey', some 53pc of credit applications from small and medium enterprises (SMEs) were refused in the three months to the start of December, up from 49pc in September.
The results are in stark contrast to the recent Department of Finance survey, which found that more than three-quarters of formal applications for credit were being accepted.
According to ISME, around 39pc of firms are seeking credit, which is broadly in line with other reports on the industry.
Worryingly, however, the ISME report highlights the huge length of time companies are waiting for a decision on their loan application, echoing the government report, which found an average waiting time of a month.
According to ISME, the banks are now taking an average of four weeks to make a decision – twice as long as the Government-recommended 15 days – while companies then had to wait another month before they were able to draw down their funds.
ISME boss Mark Fielding said the results were "disappointing in the extreme".
"After all of the bailing out and cosseting of banks and bankers, the main rescued banks are not stepping up to the plate.
"There is no doubt that banks are not lending to the level appropriate to an economy 'on the mend'.
"We must put an end to the fiction that bailed-out Irish banks are functioning properly. Access to credit is abysmal, the application process is getting more torturous and businesses are not being told their rights."
The survey comes a week after Finance Minister Michael Noonan unveiled changes to the tax code aimed at easing cash flow for the SME sector.