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falling debt

SMEs dipping back into loans from 'bailed-out banks'

But total borrowings for small business are still headed south.

LENDING TO SMALL businesses is finally on the up, but the bailed-out banks are being warned against standing in the way of cash-strapped owner-managers.

The latest stats from the Central Bank of Ireland show a small boost in the amount of new loans being handed out to small and medium enterprises (SMEs) this year.

The figures for the first six month of the year have tallied to €1.2 billion, compared to about €1 billion at the start of 2013.

Agriculture was the biggest driver of new lending in the most recent quarter, followed by the wholesale and retail sector, and transport and storage businesses.

Dragging the figures down was the share of fresh loans going to property investors and developers, who were granted only €71 million in new credit so far this year – down from the €359 million the sector drew up over the same period in 2011.

Banks coming to party

Irish Small and Medium Enterprise Association (ISME) chief executive Mark Fielding said the organisation hoped the “bailed-out banks” were finally returning to normal lending habits for viable businesses.

ISME AGMS James Horan / Photocall Ireland James Horan / Photocall Ireland / Photocall Ireland

However, the one ‘fly in the ointment’ is the delays by the bailed-out banks in making decisions, which must be improved immediately, as hold-ups of over six weeks, due to incompetent bankers can delay the growth plans of business,” he said.

ISME’s latest bank survey revealed there had been increased demand for lending and a lower refusal rate.

Debts are down

Meanwhile, the total credit advanced to Irish small and medium enterprises (SMEs) is at its lowest ebb since early 2011.

SME borrowing stood at €61.4 billion after the June quarter, down from €73.8 billion in December 2011.

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Money lent to small property investors or developers made up the biggest share, €26.1 billion, followed by €11.4 billion of credit advanced to businesses in the financial sector.

€160 billion and falling

Total credit taken out by Irish private-sector enterprises was €160 billion at the end of the latest quarter, down from €220 billion at the end of March 2012.

Financial intermediaries owed €85 billion, more than half the full figure, while property investors and developers had €40 billion in outstanding loans.

Money in the bank

Deposits from all non-financial, private-sector businesses hit €41.7 billion, up from €35 billion in March 2012.

But total deposits including the financial sector were down to €88.1 billion from a peak of €95.2 billion in December last year.

READ: Easier access to loans for Irish SMEs, hopefully

READ: More jobs coming as Irish firms get ‘back on feet’

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