CPA calls for clarification on Nama proposals

The president of the Institute of Certified Public Accountants in Ireland (CPA) has called on the Minister for Finance to clarify the commitment in the Nama Bill that banks will "increase their capacity" for borrowing to the SME sector by 10%.

"While we welcome the Minister’s assertion in his speech yesterday that banks will increase their capacity for borrowing to the SME sector by 10%, we are disappointed that this commitment is not clearly defined," said CPA president John White.

"References to an 'increase in capacity' hide a multitude in terms of measurement. The critical issue facing many previously viable businesses is access to and drawdown of working capital finance.

"It is alarming to note that in a recent survey of CPA practicing accountants that almost 80% of respondents have witnessed a viable business getting into trading difficulties due to a lack of credit from their bank."

"Recent surveys have shown there is little or no demand for long-term finance at present. The SME sector does not need an independent credit committee to report this fact in six months time. The demand is for working capital facilities now that will permit the flow of money again between SME businesses.

"We are asking the Minister to put a condition on banks to ensure that at least 25% of the €7bn premium paid for loans purchased in the proposed Nama Bill be allocated to new working capital credit facilities for viable SME’s businesses.

"The banks are receiving this money at a very low rate of interest and this benefit should be passed on to the businesses that have the capacity to deliver employment and begin our much needed economic recovery."