Business Irish

Thursday 14 December 2017

Banks refusals to lend to SME overturned

Independent.ie reporters

Bank of Ireland and Allied Irish Banks had one third of their refusals to lend to small businesses overturned by the Government appointed credit reviewer.

John Trethowan was appointed to boost lending to SMEs after the banks received billions in funding from taxpayers two years ago.



The credit reviewer said yesterday that 210 full-time jobs were saved as a result of bank lending being pushed by his office with €1.7m being made available to applicants to date.



Of 76 lending decisions, 23 were overturned and a further 22 upheld with six yet to be considered in the quarter ended May 2011.



Mr Trethowan said that while Bank of Ireland and AIB have exceeded their lending targets to small firms, lending may not occurring in parts of the economy that will support recovery like exports.



The two biggest banks lend €8bn to small and medium business in the last year, €2bn more than government targets.



These banks are responsible for about 60pc of the lending market had been required to lend €3bn each to SMEs this year, as a condition of the State’s support for the banks.



He has recommended an expansion of the powers of his office to enable more businesses to be helped.



This includes an increase on the current €250,000 loan threshold that can be reviewed by his office and examining how non-NAMA banks could be encouraged to lend more.



A helpline established by his office has taken 823 calls from small business owners to day while the website has had 10,133 visits.



Meanwhile, new figures from the Central Statistics Office (CSO) show the ongoing problems facing companies seeking bank loans.



The success rate of firms looking for loan finance dropped to 50pc in 2010 from 90pc in 2007.



The number of companies looking for loans also fell – to 31pc last year from 37pc in 2007.



The 'Access to Finance' figures noted that most sectors recorded a drop in the number of loan applications between 2007 and 2010 with the biggest drop in the construction sector.



The CSO says the main reason for banks for refusing loans has also changed – to too much company debt in 2010 compared with potential risks in firms and a lack of capital in the banks in 2007.

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