Farmers attempting to finance farm expansion through further unsustainable debt are among the small businesses being refused credit by banks, according to the Credit Review Office (CRO).
Agricultural contractors working on goodwill instead of collecting debts owed to them are also being refused finance, John Trethowan of the CRO claimed.
"Farms carrying a lot of historical debt are trying to finance expansion through more debt," said Mr Trethowen. "But unless they can prove they can cope with the additional debt, they will be turned down."
However, the credit reviewer added that few farmers had featured among the businesses turning to the CRO for help in obtaining credit.
"Of the ones we have seen, they tend to have insufficient capital on the farm or not enough cash to meet repayments," he said.
In his latest report, Mr Trethowen observed that the two pillar banks (AIB and Bank of Ireland) were largely supportive of medium and low-risk lending proposals from well-established small and medium-sized enterprises and farms that already banked with them.
However, he added he was disappointed that there was not more evidence of support for "risk-taking" on new enterprises and increased lending from the banks.
From a point where banks were lending money too freely in the past, Mr Trethowen believes they are now being overly cautious.
"I perceive banks' priorities to have shifted in an attempt to excessively squeeze out credit risk in their assessment. This happens in too many cases," he said.
"This is particularly the case in the challenged sectors already mentioned, in micro-enterprises and the smaller end of the medium-sized business sector."
In the past three months, the Credit Review Office received 44 applications from small and medium-sized enterprises (SMEs) that were refused credit by AIB and Bank of Ireland.
In 17 of those cases, the banks' refusals were turned over and €2m in loans granted. Work is continuing on 31 cases.
Since the office was established in April 2010, 197 appeals have been received.
Almost 70 refusals have been overturned, with banks subsequently lending credit worth €6.9m, while 48 cases have been upheld in banks' favour.
IFA farm business chairman Tom Doyle urged farmers to use the CRO service when they were not satisfied with the outcome of a credit application.
"The rate of turnover of bank decisions by the CRO is very high, and this is an important additional mechanism to deliver more timely credit decisions," he said.
"The CRO provides a formal review of a loan application but it will also look at cases where borrowers feel that the terms and conditions of their existing loan, or a new loan offer, are unfair or have been unreasonably changed."
Contact the Credit Review Office at 1850 211 789 or email@example.com