On the back of fresh Central Bank data showing a further 4.3% fall in lending to business in January, the Small Firms Association (SFA) said yesterday that NAMA “will not deliver additional credit to small businesses” and backed up its claims by stating that currently a quarter of Irish SMEs are not receiving adequate amounts of credit.
SFA director Patricia Callan said that while NAMA should be viewed as a welcome development in terms of continuing efforts to stabilise the banking sector, “it will have no direct benefit to small business lending”.
“NAMA has been factored into the international money markets since its announcement and this has allowed the banks to raise finance themselves on the interbank markets, which is essential to their ability to lend to small business. However, it’s clear that the banks’ ability to lend to small business is curtailed at present – not by their own liquidity, but by their risk averseness in deciding to back businesses which don’t live up to the banks’ assessment of ‘viability’,” Ms Callan said.
“When a small business fails, it isn’t because it runs out of customers, ideas or products. It simply runs out of money. With one in four small businesses in Ireland not getting enough credit, we have a very serious problem, with potentially 62,500 small business closures and 200,000 jobs lost as a result,” she added.
The SFA is still pushing for a Government-backed loan guarantee scheme – which has received tentative signs of support from the Department of Enterprise, Trade and Employment – for the SME sector, alongside NAMA, and expects to hear back from Leinster House soon.
Reiterating his party’s opposition to NAMA, Fine Gael deputy leader and finance spokesperson Richard Bruton said: “Banks continue to tighten their credit squeeze on vulnerable employers.
“And even when NAMA starts purchasing toxic developer loans with taxpayers’ money at inflated prices, both the International Monetary Fund and the banks themselves have confirmed this is unlikely to have any material impact on credit conditions facing struggling businesses.”
Ireland’s other leading representative body for the small business sector, ISME, is working on a survey of its members concerning the issue of credit availability and is due to publish its findings next week.
Hopes of an upbeat response from members are low, according to its spokesperson Jim Curran.
“The reality is that all the banks will do, on the back of NAMA, is to shore up their own balance sheets. Banks have always done what’s good for themselves first and the likes of small business concerns come down the line and we don’t see that trend changing,” he said.