Public comment on SME lending

The Department of Finance has opened a public consultation process on the effectiveness of the Credit Review Office — the body established two and a half years ago to monitor the flow of bank credit to SMEs.

The month-long forum will be open to the public and small firms.

“The action plans for jobs contains a commitment to assess the Credit Review Office to ensure SMEs are getting the support on bank lending they require,” Finance Minister Michael Noonan said yesterday.

“All suggestions put forward will be considered with an open mind, as we are trying to get as many ideas as possible which will develop new thinking on the issue,” he added.

Yesterday’s announcement coincided with an independent survey into SME lending, which showed increases in credit demand and loan approvals. The third quarterly Red-C survey covering the three months to the end of September shows SME loan approval rates increased 4% to 76%, when compared to the preceding three-month period; with credit demand rates up 1% to 39%.

However, the survey also said the pervading attitude among many SMEs remains that the banks aren’t lending. It also found that in nearly 70% of cases where formal applications were declined, the bank didn’t inform the borrower of their right to an internal review.

In the three months under review, the percentage of borrowers saying they were given no reason for not being approved a loan rose from 15% to 24%.