There has been a decrease in the number of SMEs being refused loans by financial institutions, according to new research by ISME.

For the group’s latest Quarterly Bank Watch Survey, which covers the period between March and May of this year, 35% of companies who applied for funding were refused credit by their banks, representing a drop on the 43% rate seen in the previous quarter.

Other findings showed more than a quarter of initial bank decisions were made within one week, down from the 33% registered in the last survey.

ISME also said businesses are waiting an average of over four weeks for an initial decision to be made on loan applications, with the subsequent wait time for drawdowns increasing to three weeks.

The organisation has welcomed the findings, however, has warned that refusal rates are still too high.

ISME CEO Mark Fielding said: "Access to finance is still among the top three main concerns of SME owners, behind cost of doing business and economic uncertainty.

“The refusal rate of 35% is still too high and points to a continued overbearing risk aversion by the main banks and their inexperienced staff.

"Banks are still not lending to the level appropriate to an economy 'in recovery'. The statistics from our own Central Bank, the ECB and numerous economists, demonstrate the dearth of appropriate credit,” Mr Fielding added.

The ISME survey was conducted in the first week of June and collated responses from 924 SME owners/managers.