Nearly half of Irish SMEs have reported an increase in turnover in the last six months, while credit approval has risen to 85%.
The SME Credit Demand Survey, commissioned by the Department of Finance and carried out by RedC, also shows a significant improvement in the profitability of SMEs - with 61% reporting a profit between April and September.
Despite improved trading conditions, data shows that SMEs continue to focus on stabilising their businesses after the recession rather than pursuing significant growth strategies.
Results from the survey, for which 1,500 SMEs were polled, show there has been a slight decline in credit demand over the last six months, falling from 32% to 30%.
However, the approval rate among SMEs applying for credit has risen to 85%, and has increased steadily since 2012.
Among the 70% of SMEs that did not apply for bank finance in the last six months, the main reason cited was a lack of need.
Meanwhile, credit applications for growth and expansion purposes for SMEs are more likely to be approved than previously, and there was a notable improvement in approval rates for bank finance between April and September.
Commenting on the results of the survey, Chief Executive of Chambers Ireland Ian Talbot said: “The results show many positives for the trading performance of SMEs. It is, however, concerning that in spite of improved turnover and profitability that SMEs are focusing on consolidation, as evidenced in the decreasing demand for bank finance from 32% to 30% in last six months.
“These results reinforce the need for Ireland to continue to improve the general environment for entrepreneurs and to address taxation and other issues that may be dampening appetite to expand and grow,” he added.
Meanwhile, Small Firms Association Director Patricia Callan raised issues around bank communications.
She noted that the report found that the majority of applicants (77%) who have been declined did not agree with the decision, that more than a quarter (26%) were not given any reasons for decline and that 64% were not informed of their right to an internal appeal, with just 53% informed of their right to appeal to the CRO.
"It is clear that the banks still have a long way to go in standardising customer experience at branch level," Ms Callan said.
"It is critical in rebuilding the small business banking relationship that communications are improved, that clarity is given around decision-making rationale and that process targets of 100% of applications being dealt with in 15 days and all declines being informed of their right of internal appeal and external appeal to the Credit Review Office, are achieved in the next six months," she added.
