Banks will not up lending to SMEs
There has been a lot of discussion about increased bank lending to SMEs and start-up businesses.
There will be no significant increase in bank lending to these potential borrowers.
The reason is simple -- they are high risk. Any potential revenue to banks from successes will be more than wiped out by failures. At the best of times this is the case.
Tangible security was and will be required. SMEs and start-up businesses that have tangible and realisable security are already getting the required credit.
In present circumstances banks will not engage in risk lending. They simply cannot afford to. They will of course maximise profits. This will almost exclusively be done by non-lending products -- insurance, pensions and so on.
Home loans -- once regarded as gilt-edged lending -- are hard to get. However, as house prices come down to more realistic levels home loan availability will increase in the medium term.
Significant increase in SME lending will simply not happen in the medium term, much less the short term.
Bank of Ireland Manager (Retired), Athlone, co westmeath