ISME doubtful over €12bn credit target to small firms

SMALL firms’ lobby group ISME has said it doubts the country’s two main banks – AIB and Bank of Ireland – will accurately fulfil their requirement of making a combined €12bn in new credit available to the SME sector over the next two years.

ISME chief executive Mark Fielding expressed the sentiment while addressing a Dáil committee looking into the cost of regulation adherence to small firms.

Last month, Finance Minister Brian Lenihan stated that AIB and Bank of Ireland will each have to provide no less than €3bn in new lending reserves for SMEs this year and next.

Mr Fielding again criticised last week’s Mazars report into SME credit, which showed improving but still lowering levels of available bank credit to small firms.

He said ISME not only had not been consulted in the report’s research, but did not even learn of the report’s existence until the day of its publication.

AIB recently said it is determined to meet the commitments, is committed to making the €3bn annual figure available and will make an additional €20m available in seed capital. However, it added that its lending practices would only mirror demand – which the Mazars report suggested had also deteriorated.

Mr Fielding told the Joint Oireachtas Committee on Economic and Regulatory Affairs that legislatures should “think small first” when setting out requirements; adding 4% of an average SME’s turnover is expended on regulatory burdens.

“Nine out of 10 enterprises employ fewer than 10 people, but they’re being regulated as if they employ 1,000,” he said.

ISME has also called for more joined-up thinking from Government for support to the SME sector and Mr Fielding said further resources are needed at the Government’s High Level Group on Regulation.

Last week, IBEC voiced, to the same committee, a need for a standard cost model to lower the cost of regulation for SMEs – which currently stands at €300m to €400m a year.