SMEs struggle with low lending

A combination of a weak economic outlook, over-indebtedness, plummeting domestic demand, and previous over-investment are all responsible for the low levels of borrowing among SMEs, according to a major survey by consultancy firm DKM and commissioned by the Irish Banking Federation.

Last July the Central Bank released a report which found that Irish SMEs faced some of the most challenging conditions across the eurozone in accessing credit, including punitive levels of interest on loans that are sanctioned and comparatively high levels of loan rejections. The Irish Banking Federation challenged the findings of the Central Bank report when it was released.

The DKM report says the SME lending landscape is nuanced and a number of factors can be attributed to constrained levels of borrowing. It says the cross-country analysis of SME lending ignores credit supply conditions.