Tuesday 20 February 2018

Small and medium enterprise credit initiative should go further, claim trade groups


Peter Flanagan

A PUBLIC consultation run by the Department of Finance, aimed at improving credit conditions for small and medium enterprises (SMEs), was criticised yesterday by trade groups as "just words" and "not going far enough".

The first round of submissions from the public to the Credit Suggestions Initiative (CSI), which aims to improve the number of SMEs applying for credit, were released yesterday, with over a hundred submissions going forward for assessment by a "stakeholders group", made up of the banks, SME groups, and government bodies.

Last night, however, the Small Firms Association (SFA) and the Irish Small and Medium Enterprise Association (ISME), which are both part of the stakeholders group attacked the initiative, saying it didn't address the problems in the sector.

SFA director Patricia Callan said the CSI did not go far enough.

"Our members made a number of submissions to the CSI but its narrow remit means it cannot address the issue of access to credit accurately.

"The initiative seems to be focused on persuading more SMEs to apply to the banks for credit but the problem is the banks aren't lending, not that SMEs aren't applying.

"It's a start but we would like to have seen the CSI go further," she added.

ISME's Jim Curran took a similar view, and said the Government needed to implement plans it had already agreed rather than look for more submissions.

"The CSI in itself is fine but the SME sector needs action, not more words. The Government has already committed to a number of measures to help the sector, including a state guarantee bank to increase lending to SMEs. It should be focused on implementing plans such as this rather than look for more suggestions to help the sector," he said.

The CSI, which began taking submissions from the public in May, has whittled the suggestions down to just over 100, which will now be assessed by the stakeholders group.

The submissions were classed under various headings such as "education", "cost and conditions of credit" and "creating alternatives".

The suggestions being considered include: having the same credit application form for all banks; the appointment of bank staff specifically to deal with SME accounts in every branch and the removal of "negative marks" from businesses which have credit applications turned down.

The possibility of allowing alternative forms of security and making debt for equity swaps easier will also be assessed.

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