New body has no legal power to overrule banks on SME loans
A State body set up to support small businesses that are refused loans has not been given powers to force banks to overturn decisions.
The Credit Review Office, the agency first tasked back in December with giving borrowers a second chance if banks refuse loans, was unveiled yesterday by chief executive John Trethowan. It is aimed at helping small- and medium-sized enterprises, sole traders and farmers.
The office will review any loan application for less than €250,000 that has been refused in writing since the beginning of the week, if requested. It can ask the five banks and lenders that were bailed out by the National Asset Management Agency for the reasons for the refusal but cannot force the banks to change the decision.
Mr Trethowan said that despite this, banks would more than likely accept his rulings. "The minister has appointed me, and obviously he has a bit of influence at the moment as being the major shareholder (in the banks)," the former chief executive of NIB bank said. "If the credit reviewers and myself come up with the opinion that a credit is safe, I am pretty sure that the banks will be minded to listen."
The Irish Small and Medium Enterprises Association (ISME) welcomed the agency. "I can't see very many refusals being overturned by the review body," ISME chief executive Mark Fielding said. "The banks will have to be very careful to make sure they go through the full rigours when looking at a loan application now."
The process covers all applications for new loans from €1,000 to €250,000.
A review will cost between €100 and €250.