Loan refusals for SMEs still too high

ISME, the Small and Medium Enterprises Association, released its latest Quarterly Bank Watch Survey.

The survey found that 41 per cent of respondents needed additional or new bank facilities in the last three months; 35 per cent who applied for funding were refused and 31 per cent had seen an increase in the charges applied to them by their banks.

The results show an improvement in the loan approval rates for SMEs and the demand remaining steady.

While welcoming the findings, the Association warned that refusal rates are still too high and there is much more progress needed in this area and in the length of time taken to get approval.

“Access to finance is still among the top three main concerns of SME owners, behind cost of doing business and economic uncertainty. The refusal rate of 35 per cent is still too high and points to a continued overbearing risk aversion by the main banks and their inexperienced staff,” said ISME CEO Mark Fielding.

“The national figures clearly demonstrate that all three rescued banks are chasing Prudential Liquidity through reduction of the quantity of loans on their balance sheets through a reduction in SME lending,” Mr Fielding said.

“Banks are still not lending to the level appropriate to an economy ‘in recovery’. The statistics from our own Central Bank, the ECB and numerous economists, demonstrate the dearth of appropriate credit. We must put an end to the fiction that bailed out Irish banks are functioning properly,” he said.

“Despite assertions from the banking PR machine, access to credit is patchy and the application process is getting more torturous, with 21 per cent of applications still pending at the end of May,” Mr Fielding said.