ICAI survey says credit squeeze putting small businesses in danger

A majority of Irish businesses are experiencing serious difficulties in accessing finance from credit institutions, according to a survey of chartered accountancy firms conducted by the Institute of Chartered Accountants in Ireland (ICAI).

The ICAI survey indicated that over 97% of accounting firms' clients have experienced difficulties securing finance, with 79% of client companies saying they do not understand the criteria for decisions being applied by banks.

Some 80% of client companies indicate the availability of credit has reduced significantly, with 62% of the opinion credit has become more expensive despite interest rate reductions and some 97% saying terms have become more restrictive

“This survey of accountancy firms - the people working with a wide range of clients across all sectors - confirm the anecdotal evidence that a lack of credit is a significant issue for our economy," said ICAI Technical Director Aidan Lambe

"Clearly, the extent of the challenge facing both the Government and the banking sector remains considerable."

The survey however indicated that over 70% of accountancy firms' clients support the Government’s proposal to establish a National Asset Management Agency to tackle the problem of banks' bad debts.