Half of SMEs claim banks unwilling to lend: report

More than half of the country’s small business community believes the banks are unwilling to lend, despite new data showing that actual demand for credit remains low.

The SME Lending Demand Survey — carried out by Ipsos/MRBI and Mazars, and commissioned by the Department of Finance — found that 51% of small firms feel the banks aren’t lending to the sector.

However, of that amount only 20% based their view on their own experiences — with 45% forming their opinion from media reports and 35% from the experience of their business peers.

Demand for credit among SMEs remains low, the survey found. From the beginning of last October to the end of March, the report found that 38% of SMEs applied for credit from the banks — constituting a 2% rise on the preceding six-month period.

While more than 70% of credit applications were approved or partially approved, the study found that the period saw more than 40% of SMEs suffering revenue declines.

Finance Minister Michael Noonan said the report will assist his department and the Credit Review Office in monitoring the business environment in which SMEs operate.

“The SME sector will play a key role in Ireland’s continued economic recovery and it is essential that viable companies have access to credit to enable them to grow and meet their full potential,” he said.

The Irish Banking Federation said the fresh knowledge gleaned from the report should be helpful in forging “a constructive bank/SME relationship”.