Report shows some improvement in access to credit for SMEs

ISME chief executive Mark Fielding

Small and medium-sized companies' access credit from banks has improved in the last quarter, according to a report released today.

According to the Quarterly Bank Watch Survey, issued by the Irish Small & Medium Enterprises Association (ISME) confirmed that while there has been an improvement in companies’ ability to access credit from their banks, there is still a long way to go before what is regarded as normal lending patterns return.

The results also confirms that there has been a reduction in firms approaching their banks and that there still remains a large amount of companies that are unable to convince their banks to extend them credit.

The Association outlined concern at the reduction in bank competition and called on the Government to intervene, by creating a specific business lending bank, to help resolve an already critical situation.

The results of the survey, which attracted 868 responses, found that 42% of companies who applied for funding in the last three months were refused credit by their banks, compared to 55% in the previous quarter.

Some 25% of respondents had requests/demands for a change in their banking facilities, down from a consistent 32% in the three previous quarters.

A total of 83% of firms outlined that the banks are making it more difficult for SMEs to access finance.

It also found that 41% of SME owners were aware of the Credit Review Office, an improvement from 23% in June.

"The improvement reported in the quarter, while welcome, is still twice the refusal rate experienced in ‘normal’ times and does not go far enough to addressing the credit crisis," said ISME chief executive Mark Fielding.

"The fact remains that almost half of businesses that applied for credit in the last three months have been refused.

"These businesses, in many cases, will have no alternative but to downsize and reduce employment. Unfortunately, the future for these companies remains bleak, due to the unwillingness of the bailed out bankers to accommodate their long standing viable but vulnerable customers."

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