Half of SME credit applications refused - ISME survey

Monday 02 December 2013 11.49
The ISME survey shows an improvement in loan approvals and the time it takes banks to decide
The ISME survey shows an improvement in loan approvals and the time it takes banks to decide

Half of the credit applications made by small and medium-sized businesses in the past three months were refused, according to the latest ISME Quarterly Bank Watch Survey.

The representative group for SMEs described the figure as “disappointing”, despite it being an 8% improvement on the previous quarter.

It said the limited access to credit would hinder growth in the SME sector next year unless the Government made an effective intervention.

The latest ISME survey has shown that, on average, banks take four weeks to make a decision on a credit application. This is down from the five week average reported previously.

One in ten SMEs that required finance said they did not apply at all, with almost a quarter of those saying they were discouraged from doing so by their bank.

Of those that did apply, 44% sought loans, 40% sought overdrafts or changes to existing overdraft facilities, while 15% requested leasing.

Of the survey’s respondents, more than 70% said the Government was having a negative or no impact at all on SME lending.

More than half of respondents were aware of the Credit Guarantee Scheme, while more than one third knew about the Micro Finance scheme.

Lending to SMEs down 4.8% in year to Sept - Central Bank

Lending to SMEs stood at €25.1 billion in the year to the end of September, according to the Central Bank, down 4.8% on the same period 12 months ago.

The figure represents a 0.2% decline in the third quarter of 2013, according to the authority, the smallest decline since the start of 2010.

Meanwhile, new lending to non-financial, non-property related SMEs amounted to €399 million during the third quarter of the year.

Lending to property-related SMEs fell by 0.5% over the quarter, the smallest decline since December 2011.