Business lending practices to be surveyed

THE Government is aiming to get to the truth on small business lending by quizzing firms on the issue.

Also, details of a loan guarantee scheme for small businesses will be presented to the Minister next week.

The Government is hoping to introduce a partial loan guarantee scheme, which is said would help struggling companies who are unable to secure loans from banks.

The government is also undertaking a “demand survey” among small businesses which it said will reveal the true extent of business lending.

It is seeking to bring truth to the situation of lending to businesses as banks say they are open for business but companies say they are getting refused loans. The “demand survey” is expected to be released in early November.

Limerick deputy, Willie O’Dea, said that figures from the Central Statistics Office showing that only around 50% of applications for credit were successful last year compared with 90% in 2007 were unacceptable.

He said there is a “credit famine” at the moment.

However assistant secretary at the department of enterprise, trade and employment, Clare Dunne, said that a 90 to 95% approval rate for business loans was “very high” and wouldn’t represent the norm.

Ms Dunne said that she accepts there has been a drop in lending to small firms but she said “we need to get to the truth” on the issue of supply and demand.

Deputy O’Dea argued that many companies believe that there is no point even asking banks for a loan as they are so sure they will be refused.

In response, Ms Dunne suggested that business owners should be more “pushy” with banks.

The Oireachtas Committee on Jobs, Social Protection and Education discussed proposals to enhance the availability of credit for business with specific reference to the partial loan guarantee scheme, credit insurance.

A loan guarantee scheme hasn’t been easy to establish, according to the department of enterprise and innovation, which were before the committee yesterday. It said however that it should be ready by the end of October.

Representatives of Irish Business Corporation were also present to discuss proposals for the creation of a strategic investment fund for SMEs.

Committee chairman, Deputy Damien English, said: “Credit is the life blood of business and the availability of credit can be a matter of life or death for enterprise.”