NEWS that the Central Bank is to force banks to deal with the loan arrears of thousands of small to medium enterprises (SMEs) will send shivers down the spines of hard-pressed business owners.
Small businesses have been hanging on by their fingernails for years, but for many, 2013 could be the make-or-break year.
A throwaway line in one of the recent IMF reviews of Ireland pointed out that many of the smaller property loans of €20m or less – once destined for NAMA – are being handled by banks, as they were taken out by local SMEs.
The banks, the IMF says, are better placed to deal with smaller land and development loans, as these loans are often "cross-guaranteed" by SMEs. And therein lies the problem: many SMEs are failing because their business is simply not viable.
True, a lot of SMEs are struggling to get access to credit. But the reality of lending to small businesses is much more complex.
SMEs are vital for economic recovery but that recovery will only come when the banks start lending to viable, healthy, growing business.
That means they must also finally start dealing with the zombie companies they have kept on life support for far too long.