A new report shows that gross new lending to Small and Medium sized Enterprises rose by 5.1% in the third quarter of 2016 compared to the same time the previous year.
The Central Bank's SME Market Report also said that lending growth is highest in the manufacturing, hotels and restaurants and construction sectors. Declines were reported in the wholesale, retail and services sector.
The SME Market Report, which is released twice a year, gives information on credit demand and access, loan terms and conditions, loan default rates, interest rates and credit market concentration.
The latest report reveals that the SME lending market remains very concentrated with the combined market share of the three main lenders - AIB, Bank of Ireland and Permanent TSB - amounting to 93%.
It also shows a continued decline in demand for bank financing, with 23% of firms applying for bank finance, down from 26% in the previous survey.
The share of applications for working capital has decreased since 2012 while the share of loans for new vehicles and equipment as well as growth and expansion plans has increased.
However, rejection rates have increased since the last survey with the rejection rate rising to 16% from 11%. The Central Bank said, however, that rejection rates are in line with euro zone averages.
Today's survey also shows that SMEs are performing better on paying back their loans.
The latest Central Bank data shows that 24% of SME's outstanding balances are in default, down substantially on the 41% in default in 2013.
The Central Bank report also noted that interest rates for SME loans are higher than euro zone averages, despite declining from 5.9% to 5.5% over the quarter.
