SMEs ‘don’t shop around for credit’

Solely relying on traditional bank credit will only inhibit growth and job creation in SMEs, a new survey has warned.

The study — carried out by market research company, Behaviour & Attitudes on behalf of leading SME funder, Bibby Financial Services Ireland (BFSI) — claims that nearly three quarters of Irish SMEs don’t shop around enough when seeking credit and that banks aren’t in a position to adequately finance the needs of the small business community.

“The traditional banking model is outdated and no longer in a position to adequately finance the range of varied funding requirements of SMEs,” according to BFSI managing director, Ronan Horgan.

“SMEs need to shop around and consult external advisers to ensure they are informed of their funding options and can benefit from non-bank sources of funding which are available to them in the market,” he added.

The new survey found that as much as 74% of Irish SMEs don’t get external advice, outside of their company, when seeking finance, while nearly one quarter of firms don’t get any financial advice, whatsoever.

Mr Horgan said such trends are “worrying”.

“Many SMEs are exporting and taking advantage of growth in the EU and US markets. This growth is rapid and generally requires funding to take on new orders, meet additional payroll requirements or safeguard themselves from late payments. SMEs require a culture change and need to look to alternative sources of funding, which can process applications in a matter of days, to support these requirements,” he added.