ISME members refused in half of loan and overdraft requests
Published 02/03/2010 | 05:00
A DAY after new figures showed five companies a day went bust last month, business lobby group ISME warned that half its members' requests for overdrafts and loans are being refused.
The stark figures chart ISME members' experiences during a three-month period and prompted the group's boss Mark Fielding to warn that more firms would go under unless the banks up their game.
Meanwhile, separate data from company monitors ICC showed that the 952 companies declared insolvent last year boasted combined debts of close to €1.2bn when they filed their last returns with the Companies' Office.
The ISME figures stemmed from the group's quarterly Bankwatch survey, which found that 55pc of businesses interviewed were refused funding by the banks in the past three months.
More than 30pc of the total requests refused were for overdraft facilities, with 47pc for term loans.
ISME has called on the Government to intervene through the National Asset Management Agency (NAMA) process to force the banks to start lending to small businesses.
Europe gave NAMA, which is designed to purge the banks of billions of euro of developer loans, the green light last week.
But ISME said yesterday that any banks that fail to open up lending channels to viable small businesses should automatically be refused any further state assistance with their recapitalisation programmes.
Anglo Irish Bank, Allied Irish Banks and Bank of Ireland have received €11bn so far between them in capital from the State and analysts expect they will need billions more.
"The introduction of NAMA needs to include a commitment from the beneficiary banks to increase the level of lending to their viable SME customers," said Mr Fielding.
He added that the "nine out of 10 approval" spin by banks needed to be knocked on the head as it referred to fully completed formal applications.
He also called for the loan guarantee scheme for the SME sector which had been mooted by Tanaiste Mary Coughlan to be introduced immediately.
The ICC report, meanwhile, showed that the 952 companies that went bust last year owed €880m in short-term debt and more than €300m in longer-term debt when they filed their last full-year accounts.
The Companies' Office trawl also revealed that almost 60pc of those companies had negative net assets at the time of filing, while a scan of the judgments register showed almost one in five of the companies that had creditors meetings last year had outstanding judgments before they went into liquidation.