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Loan approval rates nearly halved in three years - CSO

90 per cent of all business loan applications were approved in 2007, but only 50 per cent were given the thumbs-up by 2010.

Image: taberandrew via Flickr

THE AMOUNT OF loan applications being approved by Ireland’s financial institutions nearly halved in just three years when the credit crunch set in, according to new statistics compiled by the Central Statistics Office.

While the volume of enterprises applying for any kind of credit facility had only fallen by six per cent in the three years – from 37 down to 31 per cent – the sheer scale of the declined applications underlines the difficulties faced by Irish businesses in finding capital.

While 90 per cent of all commercial applications were approved in 2007, just 50 per cent of the same loans were approved in 2010.

The gravity of the situation is further underlined by the CSO’s stats which show that 60 per cent of businesses said they would need financing to maintain their businesses between 2010 and 2013.

Businesses with over 50 employees were more likely to seek finance, with the quantity of those businesses seeking credit falling by a smaller amount than those with fewer people ‘engaged’.

It was in smaller firms that the loan finance approval rate fell most: while 93.2 per cent of firms with 10-49 people ‘engaged’ were approved for loans in 2007, only 66 per cent of them were approved in 2010.

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Separately, the Credit Review Office – to which loan refusals under €250,000 can be appealed – has produced its fourth quarterly report, indicating that just 40 decisions from either AIB or Bank of Ireland to deny credit were overturned or sanctioned with conditions, out of a total of 228 applications.

The Small Firms Association said the report underlined that the government’s policy on bank lending to small businesses was not being matched by practice, and urged the introduction of a government loan guarantee scheme.

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Gavan Reilly

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