The Chief Executive of the Irish Bankers Federation has told an Oireachtas Committee that any customer with a sustainable business, who is in need of credit, needs to approach the banks.
Pat Farrell told the Committee on Jobs, Enterprise and Innovation that it was a myth that banks were not lending.
"It's a myth that if you approach a bank for credit its going to affect your credit history," he added.
He told the Committee that 2,000 credit applications for SMEs are approved by banks every week.
He said the banks have approved €2.5 billion in overdraft facilities for SMEs and a further €2.5 billion has been approved but has not been drawn down.
Pat Farrell said that a lot of SMEs are experiencing a high level of distress and this has to be a factor for banks when approving further credit or refinancing existing loans.
Earlier Mr Farrell told the committee that refinancing of existing credit arrangements was as important as new lending.
He said the IBF was working with SMEs to help them access credit. He said the problem was not just about bank debt, it was also about equity and capital.
Mr Farrell added that there had to be a positive atmosphere - if people say banks are not lending, it will become a self-fulfilling prophecy, he warned.
John Trethowan of the Credit Review Office told the Committee that there's an over-rigorous approach by banks requesting information when it comes to processing loan applications.
He said that there was a 'slow mo' approach when it came to lending to SMEs and this was really irritating borrowers.
Earlier he told the Committee that customers felt remote from banks and he said that neither banks nor customers were enjoying the interface of loan applications.
He urged small business owners that they had a right to approach the banks with a view to applying for credit but they must go to the banks prepared to answer questions and they must apply in writing.
