THE COUNTRY'S main banking body says lending to small businesses is on target and not being constrained by deleveraging.
New research commissioned by the Irish Banking Federation (IBF) says targets for loans to small and medium enterprises (SMEs) are being met and will continue to be met within current deleveraging plans, which require Irish banks to reduce their balance sheets.
But ISME, a representative body for small firms, says these targets do not represent new loans. ISME says the targets – €3.5bn in 2012 alone – are being met by refinancings or extensions of already existing loans rather than new lending.
Outstanding loans to SMEs still fell by €1.3bn between 2010 and 2012 despite the targets, but the IBF says this is due to the number of SMEs, particularly in under-stress sectors, like the hotel business, focused on paying back their loans.
The IBF report, prepared by economic consultants DKM, says that statistics on SME lending pay far too little attention to the balance sheets of SMEs and do not reveal why businesses are being rejected for loans.
The IBF says many rejections happen because these enterprises have unsuitable balance sheets or already-large loans.
IBF director Maurice Crowley repeated the comments of Central Bank official Fiona Muldoon, who said last month that half of the €50bn worth of loans to SMEs are currently in trouble.
The report refers to a recent Mazars/RedC survey which found that one in four SME loan applications were refused last year.
ISME disputes this figure. Chief executive Mark Fielding told the Irish Independent that one in two SME loan applications is refused.
He says other statistics do not take into account loan applications that are not fully completed.