Small businesses 'too slow to apply for new funding'
Published 30/07/2014 | 02:30
Small and medium enterprises (SMEs) are not applying for funding despite a range of new initiatives, an economist has warned.
Anne Hughes, of DKM Economic Consultants, said the economic environment improved for the sector in the first half to the year, with consumer confidence, sales, employment and tourism numbers up.
She said there are also high expectations around domestic growth, but raised concerns about SME lending. "There is a lot of demand for working capital purposes and refinancing, but that is not the same growth for new investment or expansion."
A DKM / Irish Banking Federation report found a third of new SME lending recorded by the Central Bank was to firms involved in finance, property and agriculture in the first three months of the year.
Figures show the remainder - about €367m - went to other types of business. The total was up 10pc on last year, but was €86m less than the end of 2013.
Ms Hughes said demand for funding is not increasing to any noticeable extent.
"Although there is a wide range of Government funding initiatives and business supports available for SMEs, all now accessible via the supporting SME online tool, the issue does not appear to be on the supply side," she said.
A drop in overall sales, legacy debt and a cautious and confused consumer who had been dented by wage cuts and tax hikes are areas of concern.
"SMEs require substantial and sustained increases in disposable incomes, consumer spending and domestic demand if there is to be a significant change in their attitudes towards seeking funds for investment and expansion," she added.