Business Irish

Sunday 25 February 2018

Banks reverse trend by rejecting more than half of firms' loan applications

ISME's Mark Fielding
ISME's Mark Fielding
Donal O'Donovan

Donal O'Donovan

More than half of all applications for business loans made in the last three months were turned down by banks, reversing a positive trend seen earlier in the year.

The rate of loan refusals shot up to 57pc over the period from a 44pc refusal rate seen in the previous three months, according to a survey of more than a thousand members of the Irish Small and Medium Enterprises Association (ISME).

"Businesses are being refused loans even for well thought out and costed projects. The lack of credit will act as a brake, holding up any economic recovery," ISME's Mark Fielding (pictured) said.

In the 1990s and early 2000s refusal rates typically saw one-in-five loan applications rejected by banks, he said.

Business operators are becoming less likely to apply for credit, according to the survey.

Just over a third of respondents to the survey requested additional or new bank facilities in the last three months, down from 41pc.

Government initiatives aimed at kick starting lending are having little impact on the ground, according to Mark Fielding.

The level of awareness among businesses about some of those schemes is very poor, he said.

Just 28pc of those surveyed know about the Micro Finance scheme, which is supposed to make it easier for smaller businesses to access loans of less than €25,000.

Access to finance will be among the issues covered in a 'one-stop shop' for business owners to be held on October 22 at the Printworks Conference Centre in Dublin Castle, which is being launched today by Small Business Minister John Perry and Senator Feargal Quinn. The event is aimed at business owners, managers and people thinking of starting a company.

Nineteen state agencies, including Microfinance Ireland, the Revenue Commissioners, County and City Enterprise Boards and Enterprise Ireland will have stalls at the event, where presentations will focus on key regulatory requirements and the assistance available to help entrepreneurs develop their businesses.

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