ALMOST nine in ten SMEs were back trading by the start of June, but a survey by the Central Bank shows that some sectors - particularly food and accommodation - have burned through cash reserves and overdrafts.
The bank's market report on SMEs - small and medium-sized enterprises employing up to 249 people - found that firms actively using their credit facilities have untapped funds averaging just €1,733.
"Many SME revolving loans have zero to small undrawn balances indicating limited working capital credit buffers," it said.
Surprisingly, it found that 57pc of firms hold no debt at all, including 44pc in accommodation and food sectors.
Brokers Ireland said the State's emergency loans for SMEs are unaffordable for many firms, including the Covid-19 Business Loan and Working Capital schemes' rates averaging 4pc to 5.5pc.
"SMEs do not want to get over-indebted," said Rachel McGovern, director of financial services at Brokers Ireland.
"The Government has to do much better than what is currently available and offer loans at rates of interest closer to zero," she said. "Anything else would see lenders profiteering on the backs of struggling SMEs."
The Central Bank forecasts that small firms' credit demands will rise in this quarter, but retail banks will keep tightening their lending.
It found that banks have slashed lending to SMEs since March, when business loans below €250,000 rose by 28.9pc. Such lending since has slumped by 19.6pc in April and 28pc in May versus their respective months a year ago.
"Demand for all firms is expected to increase slightly in Q3 for both short- and long-term credit," it said.
Small firms' appeals for bigger overdrafts "spiked in April … as a precautionary measure to ensure the availability of working capital", it found.
Nearly a quarter of SMEs "ceased trading temporarily or permanently in April", but this recovered to just 11pc of firms at the end of May.
While two-fifths of firms have not cut costs, the majority have slashed non-personnel costs by an average of 43pc.
Two in five firms say they have outstanding invoices equivalent to a fifth of their entire 2019 turnover.
This "may pressure cash flow or amplify shocks upon company failure", the report said.