Friday 9 December 2016

Fall in number of small businesses applying for credit

Published 10/11/2015 | 02:30

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Fewer than a third of small and medium-sized enterprises (SMEs) are looking for credit, with the vast majority focused on stabilising their business rather than pursuing growth opportunities, a Government-backed report has said.

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More than eight in ten SMEs have reported improved or stable turnover since April as well as improvements in profit performance and staff numbers, according to the latest SME credit demand survey from Red C, published by the Department of Finance.

Perhaps not surprisingly, the report says that many small businesses remain cautious about taking on more debt.

"Credit demand remains low with 30pc of all SMEs having applied for bank finance in the past six months - a decrease compared to the previous six-month period," the report said.

"It is evident that while SMEs are pursuing smaller growth opportunities, the main focus is business consolidation. SMEs remain cautious in relation to debt and many rely on internal funds for financing growth."

Almost half of firms reported increased turnover in the last six months, with an additional 38pc reporting stable turnover.

Some 61pc reported profit over the last six months, the report said.

Among the 70pc of SMEs that did not apply for bank finance in the past six months, the main reason was that they simply didn't need it. "This is especially the case among medium-sized companies where we see the biggest decline in credit demand," the report said.

"This is a further indication of SMEs remaining cautious and relying on other finance sources than bank finance for growth."

For those that did apply for credit, the main reason was for working capital.

Irish Independent

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