Isme urges banks to grant SMEs more loans

There has been a big increase in loan refusals from banks to SMEs, the body representing the sector claims.

In its latest quarterly banking survey, small firms group Isme said that 39% of companies who applied for funding in the last three months were refused credit by their banks, a rise of 5% from the previous quarter.

It said that of the 528 firms surveyed, more than half claimed banks are making it more difficult for them to access finance.

Over half surveyed said they were with their bank for more than 20 years.

Isme chief executive Neil McDonnell said: “As we enter into the post-Brexit world, it is vital SMEs are supported in Brexit-proofing their business — this starts with access to finance.”

The organisation called for loans to be processed in a more timely fashion, claiming the period between application and granting of finance was becoming longer.

Mr McDonnell said: “Failure to provide access to finance is undermining businesses and putting jobs at risk.

"The time taken from decision to drawdown has also increased significantly, from six weeks to eight. This must be addressed.”

Isme called on the Government to “investigate other sources of finance that can be made available to viable cash-starved SMEs”, as well as promoting SME funding company Strategic Banking Corporation of Ireland, which is backed by the European Investment Bank and the Ireland Strategic Investment Fund.

Mr McDonnell added: “If the main pillar banks are refusing to lend credit, then SMEs must look elsewhere for alternative sources of finance.”