Banks' lending rates should be independently verified to address concerns around the availability of bank credit to SMEs, according to the Joint Committee on Jobs, Enterprise and Innovation.

In its report on Access to Finance for SMEs, the committee expressed concern about the divergence of opinion between the banks and SMEs in relation to bank lending. 

As opinions on the availability of credit for SMEs are so divergent, it has suggested that the Central Bank carry out a study into independent verification of lending rates.

The report also noted an over-reliance on bank loans and overdrafts, and highlighted the need for sector-specific specialists in banks. 

Committee vice chairman John Lyons TD said: "Our Committee has identified the availability of funding and supports for small and medium sized businesses as a key priority in national efforts to achieve economic recovery."

A total of 25 recommendations were documented in the report, including a suggestion that Credit Unions should have a greater role in local job creation and in supporting SMEs.

It also proposed that a mandatory detailed written explanation should be supplied by banks to explain why a particular application for credit had been turned down. 

The Small Firms Association welcomed the report's publication.

Commenting on the report, SFA Director, Patricia Callan said: "For Irish SMEs, supply of finance is second only to finding more customers as the most pressing issue we are facing.  

It is critical that the practical recommendations contained in this report are accepted and acted upon immediately. They have the potential to make a real difference to improving SME financing".

Mr Ronan Horgan, Managing Director, Bibby Financial Services Ireland said:

"A fundamental culture shift is needed if we are to ensure that the SME sector is adequately funded for growth and job creation. This new focus must be centred on further developing non-bank funding options for Irish SMEs, as recommended in today’s report. This will serve to drive growth and export-led recovery".