ISME: Banks are 'not open for business'

An ISME Bank Watch Survey shows that banks are continuing to restrict lending to the Irish SME sector, with 58% of companies being refused credit facilities in the last quarter.

The Association demanded that Government force the banks into freeing up badly needed credit.

The results of the survey, which attracted over 400 responses, show 58% of companies who applied were refused credit by their banks, an increase from the 48% in the Bank Watch survey of February 2009.

62% of companies found the banks to be ‘unhelpful’ in their request for acquiring finance, while 83% said that the banks are making it more difficult for SMEs to access finance.

ISME Chief Executive, Mark Fielding said: “Contrary to public statements issued by the banks, there is clear evidence that they are making it as difficult as possible for business customers to access badly needed credit, with serious ramifications for those concerned. The duplicity of the banks is self-evident and, if left unchallenged, will lead to a huge increase in company closures with thousands of additional job losses.”

“Sound profitable businesses, which require credit facilities, are among the companies being refused. The result is that companies either have to put plans on hold or are faced with increased cash flow problems, which in many cases is threatening the viability of the businesses concerned.

“Over the last number of months the main banks have introduced new lending schemes ‘specifically targeted at SMEs’. Ironically, with the securing of badly needed EIB funding, the situation for SMEs is worse than ever. It is obvious therefore that the banks ‘initiatives’ are nothing more than PR stunts, in an effort to give the impression that they are open for business, whereas in fact the opposite is the case.

“The introduction of a Government guarantee scheme, similar to that introduced in the UK, would also help in the current crisis. Should the situation be allowed to continue, business activity will deteriorate, creating a vicious cycle of funding deficiencies leading to company closures and job losses,” Mr Fielding warned.