73% of SMEs report stable or improved turnover - survey

Tuesday 03 December 2013 12.57
Fewer SMEs applied for credit in the past six months, according to the survey
Fewer SMEs applied for credit in the past six months, according to the survey

Turnover at almost three quarters of SMEs has been stable or improved in the past six months, according to the latest Red C SME Credit Demand survey, a 10% increase on the previous period.

The survey, conducted on behalf of the Department of Finance, found that 21% of SMEs had increased staffing numbers in the past six months – up 7% - while 12% had reduced levels – down from 16% in March.

More than two-thirds of small and medium-sized businesses had applied for credit between April and September, according to the figures, 4% lower than in the previous survey.

Excluding applications that were still pending, 80% of the requests made were granted – a 4% improvement on figures from March 2013.

There was also a 4% change on the number of companies that disagreed with the reasons given by their banks for a credit refusal, which fell to 73% compared to the last figure.

Meanwhile 10% of SMEs claimed they were not been given a reason for a credit refusal; down 1% on the previous period.

In terms of perception, 51% of SMEs surveyed agreed that banks were lending – up from 47% in March.

The Irish Banking Federation has welcomed what it called “a number of positive trends” highlighted in the survey.

It said that the figures suggested a reduced dependency on working capital amongst SMEs, with some evidence that SMEs are relying more on cash flow for finance.

Chambers Ireland said the survey pointed towards further stabilisation in the economy, with chief executive Ian Talbot saying they suggested “that more SMEs are now on a sustainable footing”.

However he said it was clear that many SMEs still felt that banks were not lending, and encouraged businesses to make “to take a chance” and make an application.

Meanwhile the Small Firms Association welcomed the figures, but said it showed a “worrying trend” of more conditions being attached to credit approvals.

The survey shows that 78% of credit approvals came with attached conditions and acting director Avine McNally said it was “critical that... the cost of credit is not too high and that loan terms and conditions are clear and manageable”.