Monday 22 January 2018

Survey shows half of SME loan bids still thrown out

Peter Flanagan

Peter Flanagan

IT is as hard as ever for a small business to get a loan, and the Government isn't doing enough to ease conditions.

That was the message from the latest 'Quarterly Bank Watch' survey from small firms' lobby group ISME.

According to the report, 52pc of companies who applied for funding in the last three months were refused credit by their banks, little changed from the previous quarter.

Despite the Government's much heralded aids to small business lending, such as the loan guarantee scheme and the mandated lending targets of €3.5bn each for the AIB and Bank of Ireland, companies who took part in the survey were almost unanimous in their belief that the Government was not doing enough.

Some 95pc of them claimed the Government was having either a negative or no impact on SME lending.

The length of time a business had been a customer of a particular bank seemed to have little effect on whether their application would be approved or not.

Nearly 90pc of those who took part in the report were with their bank for at least five years, while 45pc of them had a relationship dating back more than 20 years.

Demand for credit appears to be slowing once again. Only 35pc of companies sought a loan during the quarter, down from 39pc over the previous three months, while as many as 12pc of firm did not apply for credit despite claiming to need it.

ISME chief executive Mark Fielding said the report demonstrated how tough things were for his members, and criticised claims from the banks that they were "open for business".

"The truth of the matter is that banks are deleveraging through curtailing SME lending, thereby sabotaging the economic recovery through pure self-interest," he claimed.

"The experiment of 'leaving the banks to their own devices' and expecting voluntary codes to solve the problems must now cease. Government must take a much more hands-on approach or bankers will continue to distort statistics, delay reform and feel free to terrorise small and medium businesses in their never-ending drive to maximise their own profits," he added.

Red tape

News of the ISME survey came as the Government confirmed that an online "one-stop shop" for SMEs dealing with various state regulations will be up and running by the end of the year.

Speaking at the first meeting of the steering group of licensing authorities that will devise the plan, small business minister John Perry said the system "will be developed for the retail sector in the first instance by the end of 2013 and rolled out to other sectors of the economy thereafter".

It is hoped the website will ease the amount of red tape SMEs have to deal with.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business