Banks ‘taking too long’ on loan decisions

Small firms lobby group Isme has welcomed new figures showing increases in SME lending levels, but said banks are still taking too long to decide whether or not to approve loan applications.

New data, published yesterday by the Central Bank, showed gross new lending to SMEs (excluding those in the financial or property sectors) amounted to €1.1bn over the course of the first half of the year; up marginally from €900m for the same period last year.

There was, however, a 1.5% decline to €22.6bn in the second quarter. SMEs accounted for 38% of all credit advanced to the private sector from the covered banks during the six months and the amount of outstanding loans to SMEs was down by nearly 3%, on a quarter-by-quarter basis, at the end of June.

Isme welcomed the data, but said more needs to be done.

“The success rate for SME lending applications has increased and must be welcomed.

“However, the one ‘fly in the ointment’ is the delays by the bailed-out banks in making decisions, which must be improved immediately, as hold-ups of over six weeks — due to incompetent bankers — can delay the growth plans of business,” said Isme chief Mark Fielding.

“While the Central Bank has issued a note of caution in the interpretation of their figures, the fact that €400m — excluding the agricultural sector — was drawn down in new loans to SMEs during the second quarter, is encouraging and represents a 31% increase on the previous year’s figure.

“While one swallow never made a summer, we are hopeful our bailed-out banks are finally returning to ‘normal’ lending to viable SMEs, which have been starved of bank credit for the past six years,” he added.

The Central Bank also noted yesterday that property-related lending to SMEs fell by 4.3% during the second quarter and repayments exceeded draw-downs by the largest amount since 2009.

The agri-sector continues to make up the largest share of gross new lending to SMEs, it added.