Tuesday 24 October 2017

Half of SMEs still being denied credit by the banks

Mark Fielding
Mark Fielding
Colm Kelpie

Colm Kelpie

HALF of businesses that applied for credit in the last six months were refused, business chiefs have said.

This is down from the 58pc refusal rate experienced in the previous quarter, according to the latest survey from the Irish Small and Medium Enterprises Association (ISME).

It comes as data from the Central Bank shows that credit to SMEs fell fractionally over the third quarter.

ISME chief executive Mark Fielding said SMEs would not be able to fulfil their role of driving growth if they could not get access to credit.

"The results of this survey demonstrate, quite categorically, that the banking system for SMEs is still not working," Mr Fielding said.

"While it is critical to restore the Irish banking system to health, it cannot be done at the expense of the SME sector and its employees.

"The shrinking Irish banking system is not fit for purpose in providing an adequate retail service or development fund for Irish SMEs," he said.

Key findings from the survey include:

* 37pc of respondents had requested additional or new bank facilities in the past three months, an increase from 36pc in the previous quarter.

* 15pc of initial bank decisions were made within one week, a slight improvement from the 14pc in the previous quarter.

* 10pc of respondents who required bank finance did not apply for various reasons.

* Of the 50pc approved for funding, 57pc have drawn down the finance either fully or in part.

* 78pc of owner/managers are in favour of an alternative Strategic Investment Bank.

Some 984 owner-managers of SMEs responded to the survey, conducted in the week ending November 29.

The latest data from the Central Bank shows that the outstanding amount of credit provided to SMEs was €68.8bn by the end of September.

This was down 0.3pc between July and September, while in annual terms the amount of outstanding credit fell 4.7pc.

Property-related lending to SMEs, which includes construction and real estate activities, constituted the largest share of outstanding loans to small firms operating in the non-financial sector, at 56pc.

Irish Independent

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