SME demand for lending at 4-year high

Demand for lending amongst the country’s small and medium-sized businesses has reached its highest level in four years, with loan refusal rates down to their lowest levels for nearly two years, a new survey shows.

However, the latest quarterly bank watch survey from small firm lobby group, Isme also claims that only 5% of SMEs are satisfied with the Government’s efforts to solve the SME lending issue.

It also shows that over half of small firms are suffering as a result of the cost of banking increasing.

According to the survey, loan demand amongst SMEs is currently at 41% — its highest level for four years — while refusals are down to 44%; down from 52% in the preceding quarter and the lowest level since Sept 2010.

Isme chief executive Mark Fielding welcomed the headline results of the survey as “positive” and “hopefully the start of a trend back to normal banking”.

“However,” he added, “the fact that both interest and charges are increasing across the board emphasises the fact that we must maintain a close eye on the bankers in the reduced market, with only two and a half main banks servicing the SME sector.”

To that end, Isme is calling for a new economic development entity to be established in order to provide additional funding and financial services to manufacturing and export- orientated SMEs, in particular. Specifically, theorganisation wants to seea development fund/strategic investment bank which would work on a commercial basis and, over time, deliver a reasonable return on investment to the State.

“The need for a new active and relevant actor in the business credit space is further emphasised by the fact that financial constraints are currently at their most binding, just when capital demands are starting to pick up again.”

Isme said 80% of SME owner/managers are in favour of an alternative Strategic Investment Bank being established.