Isme: Access to credit is abysmal

A survey by the Irish Small & Medium Enterprises (Isme) has found that credit conditions for its members are deteriorating.

Its latest quarterly survey found that 57% of companies that applied for funding in the last three months had been refused credit by their banks, compared with a 44% rejection rate in the last quarterly survey.

Isme chief executive Mark Fielding said: “Recent figures demonstrate that both rescued banks are going well beyond the Prudential Liquidity Assessment Review element of their programme, aimed at reducing the quantity of loans on their balance sheets. However, they are doing this by curtailing SME lending. Minister for Finance Michael Noonan must demand to see the books on this element alone, as it will give the answers to questions being asked by Isme since the start of the bank bailout.”

The banks have consistently rejected criticism of their SME lending policies. They have blamed the low lending levels on a lack of demand.

Mr Fielding rejects this claim. “Banks are not lending to the level appropriate to an economy ‘on the mend’. The statistics from our own Central Bank, the ECB and numerous economists, demonstrate the dearth of appropriate credit. We must put an end to the fiction that bailed-out Irish banks are functioning properly.

“Despite assertions from the banking PR machine, access to credit is abysmal, the application process is getting more torturous, while ‘zealous’ bankers terrorise owners of small and medium businesses with legal letters of foreclosure, rather than negotiate an economic settlement.”

Other findings in the Isme survey include that only 35% of respondents had sought additional credit facilities over the past three months; 12% of respondents did not apply for bank credit for various reasons.

Of this cohort, 39% did not apply for a bank loan because they were discouraged by their bank from making an application and a further 39% were afraid of a reduction in existing facilities.

The decision time for a loan application had increased from four to five weeks; 95% of respondents say that the Government is either having a negative or no impact on SME lending while 30% had increases in bank charges over past three months.

Isme called on the Government to ensure that there was honest and reliable reporting from the banks and that a strategic investment bank should be set up as well as alternative forms of finance.

“As was clearly demonstrated by their display in front of the Oireachtas Committee last week, the rescued banks are treating their SME customer with disdain and continue to hoodwink the Government with continuing half-truths and distorted statistics as their assertion of eight out of 10 loans granted has become a sad national joke,” said Mr Fielding

“The Government and Central Bank have stood back for too long and must take action,” he said