The Department of Finance's latest SME Credit Demand Survey shows that of the SMEs that applied for bank finance in 2023, 88% had their application accepted, with 11% denied and 1% still awaiting approval.
This pattern was in line with previous years for the sector, which Finance Minister Michael McGrath described as the lifeblood of the Irish economy and which accounts for over 69% of all jobs in the business economy.
Today's survey also reveals that the average value of a credit application for new finance last year was €186,000.
Average interest rates reported by SMEs rose to 7.21% in 2023 compared to 5.13% recorded in the last survey which covered the months of April to September 2022.
The average SME has €369,000 of outstanding debt, down from €427,000 in the previous survey, and assets of just under €5 million.
Outstanding debts owed to retail banks account for 56% of all debts owed, with other non-banks accounting for 42%, the survey added.
The Department of Finance said that of SMEs surveyed, 18% applied for bank credit last year, which was broadly unchanged over recent years.
76% of SMEs surveyed who had not applied for bank credit said they had sufficient internal funds.
Over the last decade, the share of SMEs applying for bank finance has fallen by around half, from 35% to 18%, today's report noted.
It also revealed that business conditions in the SME sector were broadly positive in 2023 with 82% of SMEs surveyed reporting no change or an increase in turnover, similar to previous years.
88% of firms said they had made a profit or broken even, similar to previous years.
The report noted that medium-sized firms were more likely to report increased turnover and profitability compared to small or micro firms, while the Hotels and Restaurants sector had the highest percentage of firms reporting an increase in turnover.
Meanwhile, the percentage of SMEs exporting in 2023 was 22% up from 19% in the previous reporting period.
Other results from today's survey shows that 53% of SMEs reported increasing the price of their main product or service last year with 44% reporting no change and 3% actually reporting a decrease.
It also revealed that 16% of SMEs invested in climate -related activities during 2023, with the highest investment levels being seen for energy efficiency followed by new, less polluting technologies.
The SME Credit Demand Survey was conducted twice-yearly from 2011 to 2022 to monitor trends in access to credit by SMEs. The 2023 report was based on the full calendar year and the survey will be carried out on an annual basis in future.
The Minister for Finance Michael McGrath said that SMEs are the lifeblood of the Irish economy and account for 99.8% of all businesses and 69.2% of all employment in the business economy.
"Today's report is a critical tool to understand how the sector is performing and how needs for credit are being met," Mr McGrath said.
"The survey series provides Government with vital information on which to base policy initiatives that support businesses to manage rising costs and further invest, including the Temporary Business Energy Support Scheme (TBESS), the Ukraine Credit Guarantee Scheme (UCGS) and the Growth and Sustainability Loan Scheme (GSLS), among a range of other policy measures," he said.
"I am pleased to see that the vast majority of firms applying for credit can access it, supporting investment and continuing job growth across the economy. It is imperative that SMEs' applications for credit are assessed quickly, and that they are informed of their rights to reviews and appeals," he added.
