Irish banks need to do more to encourage the supply of credit to small businesses, according to the Credit Review Office.
The CRO, which operates as an appeal mechanism for businesses which feel they have unfairly been denied bank loans from institutions which were bailed out by the state, has conducted a survey of farms and small businesses as part of its latest report.
It suggests branch closures may be a factor in the depressed level of demand among small and medium sized companies in Ireland for bank lending compared to other countries.
The regular SME Demand surveys commissioned by the Department of Finance indicate the proportion of small firms applying for business loans has fallen from 40% in 2013 to 23%.
The CRO, which operates as an appeal mechanism for businesses which feel they have unfairly been denied bank loans from institutions which were bailed out by the state, has conducted a survey of farms and small businesses as part of its latest report.
The head of the CRO John Trethowan said he has feedback from small business owners which suggests "accountants and financial debt advisers are now more likely to advise clients to consider all other alternatives before seeking or increasing bank lending".
As a result, he said, "expansion plans are postponed or phased".
Mr Trethowan said while it was unrealistic to expect banks would re-open branches which they had closed in order to cut costs and return to profitability following the financial crisis, more should be done to boost levels of engagement with potential borrowers in areas which have seen the presence of bank branches on their main streets greatly reduced.
"For example, the greater use of technology such as Skype or Facetime could help replace the traditional face to face meeting," he said.
