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Firms face loans crisis

More than 20pc of loans to small- and medium- sized businesses are in trouble, according to the Irish Banking Federation (IBF).

The organisation said that it is currently assisting as many as 30,000 homeowners who are struggling to keep up with their mortgage payments.

They said they are facilitating the customers who are having difficulties with their payments due to the economic crisis.

And it added that the increasing number of bad loans among businesses, as well as the rising cost of credit and slowing economic growth, means borrowing will be more difficult in future.

Chief executive of the IBF, Pat Farrell, said that "credit will never be as cheap again".

"The remarkable levels of growth that this country enjoyed in the earlier years of this decade were fuelled on the easy availability of cheap credit," Mr Farrell said. "This has changed."

But he said that banks are continuing to grant loans to SMEs, which has remained steady at around €32.7bn over the past few years.

Companies made 70,000 loan applications and borrowed more than €2.6bn in loans, financing and leasing last year.

Pat Farrell said that in the current difficult climate banks are working hard to stabilise the effects of 2009 and to rebuild in 2010.

His remarks come a day after Central Bank governor Patrick Honohan criticised banks for not lending more to business. He suggested that banks had forgotten how to evaluate business loans during the property boom.