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Half of SME applications for bank loans refused in last quarter – report

A new ISME survey says that although more companies are seeking credit, lenders are still reluctant to put up their cash.

A NEW SURVEY has shown that half of all applications made by small and medium-sized enterprises for credit in the last three months were refused.

The findings, in a survey published by ISME this morning, also show that demand for bank finance – seen as an indicator of the activities of small business – had risen in the last quarter.

The survey’s results appear to contradict suggestions from the Credit Review Officer, John Trethowan, whose most recent report suggested that many complaints about credit being turned down are coming from people who hadn’t actually applied for loans in the first place.

The level of credit refusals, at exactly 50 per cent, is down only slightly on the 52 per cent rate of refusals in the last quarterly ISME survey.

The proportion of SMEs seeking credit, at 37 per cent, is up only slightly on the 36 per cent from the last quarter – but is significantly higher than the 25 per cent result shown in the same survey a year ago.

91 per cent of firms who had sought credit – making up 66 per cent of all respondents to the survey – said that their banks were making it more difficult for them to access finance.

ISME chief executive Mark Fielding said the results showed demand for credit was not as weak as banks were making out, and that the results meant Irish SMEs were behind only Greece in their difficulties accessing finance.

“It is obvious that the Government’s instructions to the bailed out banks to increase access to finance for viable SMEs is being ignored,” Fielding said.

We must put an end to the fiction that bailed out Irish banks are functioning properly. Despite the cheerleading from the Irish Business Federation, access to credit is abysmal, the application process is getting longer and businesses are not being told their rights.

Taoiseach Enda Kenny, in the Dáil last week, suggested that small firms would find it easier to access credit if they were better prepared when making applications, and that the government would work to increase education among SMEs.

He added that Richard Bruton was to bring forward legislation in the coming weeks which would allow state-guaranteed loans for SMEs.

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