57% of SME loan applications refused by banks - ISME

Monday 09 September 2013 08.09
On average it took banks five weeks to give a decision on a credit application, according to the survey
On average it took banks five weeks to give a decision on a credit application, according to the survey

Nearly six out of ten loan applications made by small businesses in the last three months were turned down by the main banks, according to a survey by the Irish Small and Medium Enterprises Association.

ISME’s Quarterly Bank Watch Survey shows that 57% of funding applications made in the past quarter were refused, up from a refusal rate of 44% seen in the last quarter.

The survey also found that, on average, the length of time it took for a decision to be given by a bank had increased from four weeks to five.

However 14% of initial bank decisions were made within one week – a 1% improvement on the previous quarter.

More than 1,020 owner-managers of SMEs responded to the survey, which represents 14.7% of those asked.

Of those respondents, 35% had requested credit in the past quarter, down from 41% in the last survey.

ISME said that 12% of those who required finance did not apply for a number of reasons, with one third of those claiming they were discouraged by their bank from making such applications.