Banks still refusing credit to 52% of SME applicants, survey discovers

More than half of SMEs are still being refused credit by the banks, according to a survey carried out by ISME.

The ISME Quarterly Bank Watch Survey found that 52% of applications are being refused by the banks and that, even when loans are granted, it takes an average of five weeks to secure a decision from the bank.

ISME called on the Central Bank to investigate the length of time it is taking for businesses to get a lending decision.

ISME chief executive Mark Fielding said the results of the survey showed that the banks were not working in their own interest and were killing the economy.

“The results of this survey demonstrate, quite categorically, that the banking system for SMEs is not working, despite the vulgar and misleading advertising by the bailed-out banks,” Mr Fielding said.

“While it may suit the administration to believe the bankers’ fiction, the truth of the matter is that banks are deleveraging through curtailing SME lending, thereby sabotaging the economic recovery through pure self-interest.”

The survey of more than 1,000 companies found that 95% stated that the Government was having either a negative impact or no impact on SME lending.

Mr Fielding said the Government cannot continue to leave banks to draw up their own codes to help provide businesses with funding.

“The experiment of ‘leaving the banks to their own devices’ and expecting voluntary codes to solve the problems must now cease,” he said.

“Government must take a much more hands-on approach or bankers will continue to distort statistics, delay reform and feel free to terrorise small and medium businesses, in their never-ending drive to maximise their own profits.”

However, a spokesperson for AIB said that the bank was already lending above the rate that the Government had targeted.

“AIB approved €4.8bn in SME lending in 2012, 37% ahead of the Government target of €3.5bn. AIB’s SME Government lending target for 2013 is €4bn,” the spokesperson said.

“In November 2012, AIB launched an initiative allowing SME loans of up to €25,000 to be decided within 48 hours at branch level.”

Mr Fielding described the banks behaviour as being like Jekyll and Hyde. “Credit lines are being restricted, deadlines missed, decisions delayed, while the banks themselves continue their Jekyll and Hyde act of ‘open for business’ while refusing more than half of all genuine SME credit applications,” he said.