Business Irish

Wednesday 13 December 2017

More than half of SMEs believe banks are lending again

Minister for Finance Michael Noonan T.D. Picture Jason Clarke Photography.
Minister for Finance Michael Noonan T.D. Picture Jason Clarke Photography.
SME Credit demand survey
Colm Kelpie

Colm Kelpie

MORE than half of small and medium-sized businesses (SMEs) believe banks are now lending, a government-commissioned survey has found.

The study by Red C found a steady improvement in the perception of bank lending among small business owners.

But the demand for credit remains low, with less than two in five of the 1,500 SMEs surveyed applying for credit in the last six months.

Four out of every five applications have, so far, been approved, according to the study.

Trading conditions are also improving for Irish SMEs, with 72pc claiming turnover has increased or has remained stable.

The study was commissioned by the Department of Finance.

Finance Minister Michael Noonan said there were signs that confidence was growing among SMEs and their customers.

"Small businesses that require credit should not be reticent in approaching the banks and viable business plans in the context of a recovering economy should provide the strong support necessary for their applications for credit," Mr Noonan said.

"If refused credit, SMEs should avail of the services of the Credit Review Office, which is overturning approximately 55pc of cases referred to them."

The survey comes just a day after a survey from lobby group the Irish Small and Medium Enterprises Association found that half of businesses that applied for credit in the last six months were refused.

The Red C study surveyed 1,500 businesses by telephone. ISME's survey involved 984 responses from 984 owner-managers.

Bank of Ireland and AIB agreed in July to fund an independent review on credit demand by SMEs, commissioned by the Department of Finance.

The first four reviews covered the period April 2011 to March 2013. The review published yesterday covers April to September.

Key findings from the Red C survey included:

* 36pc of SMEs have requested at least one type of bank finance between April and September – down 4pc on the previous period.

* 51pc agree banks are lending – up from 47pc in March and 39pc in September 2012.

* Excluding pending applications, 80pc of application requests were granted.

* Overall decline rate stands at 20pc. Eighty per cent of applications now approved either in full or partially, an increase of 4pc since the previous survey.

* 73pc of those refused credit disagree with the reasons behind the refusal.

* 72pc have seen an increase or no change in their turnover in the last six months. Up 10pc on previous survey.

* 21pc have increased staff numbers in the past six months – up from 14pc in March and 17pc a year ago.

The Irish Banking Federation said the research pointed to a number of key trends which were heading in the right direction, while also indicating the challenges that remain.

"Both at individual bank level and at IBF level, our sector remains fully focused on working with all viable SMEs – it's in our mutual interests to do so," said IBF's director of public affairs Felix O'Regan.

Meanwhile, Retail Ireland unveiled a new retail strategy claiming up to 40,000 new jobs can be created by 2020 if the sector can be put on a sustainable path to recovery.

Irish Independent

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