There was a significant increase in loan refusal rates among SMEs in the third quarter, according to research from the Irish SME Association, ISME.
Its Q3 Bank Watch Survey suggests loan refusal rates have risen from 28% to 39%, while demand for credit among SMEs has risen by 4% to 38% over the same time frame.
Over half of the survey respondents said they believed banks are making it more difficult to access finance than they were previously, while businesses also report longer waiting times to access credit.
On average, businesses say they are waiting six weeks for an initial decision on loan applications, with the wait time for drawdown remaining at two weeks.
ISME CEO Neil McDonnell said the survey results "reflect the disconnect between our pillar banks and SMEs.
"A 39% refusal rate is high, the highest since June 2016. Banks appear to be regressing; instead of improving access to finance for SMEs, it is becoming more difficult."
The association has called for Government to ensure Strategic Banking Corporation of Ireland (SBCI) funding is properly promoted by banks and investigate what other sources of finance could be made available to SMEs.
ISME compiled the data by questioning 528 SMEs during the third week in September.