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Friday 2 June 2023 Dublin: 14°C
Old bank via Shutterstock
# branch out
Irish small businesses are still too old-school when it comes to getting loans
Think more crowdfunding, less banking, economists say.

SMALL IRISH COMPANIES are too reliant on the big banks for loans but are behind the times in taking up the latest finance options like crowdfunding.

Those findings come from Economic and Social Research Institute (ESRI) research which will be handed out today at a conference about funding small and medium enterprises (SMEs) during times of economic recovery.

It said the overall demand for SME lending was expected to stay level – at about €57 billion for the entire sector – but the share being spent on property was going down.

The ESRI’s Dr Martina Lawless said Irish firms mainly turned to banks for loans which left them vulnerable to any funding problems in the sector.

“Encouraging firms to access the broader set of potential funding sources would provide a more robust financing environment for SMEs and support growth and investment,” she said.

“There are a range of novel funding options, such as crowdfunding, that just are currently overlooked by many companies”.

Kickstarter, one of the world’s most popular crowdfunding sites, recently launched in Ireland after more than €1 billion had been pledged through the organisation overseas.

4709601946_d48ee877ec_z Jason Hargrove Jason Hargrove

In the too-hard basket

The groups representing Irish SMEs have previously complained about long delays in getting bank loans approved and the difficulty for some businesses in financing growth.

SMEs employ nearly 70% of private-sector workers in Ireland and account for about half of all business turnover.

The ESRI also found:

  • “Less-formal” loans like credit from suppliers, customers and family were still used frequently
  • Businesses in the IT sector were the most likely to use new funding sources like crowdfunding and peer-to-peer lending

READ: Cash-strapped traders are turning to non-traditional lenders

READ: Irish small businesses are getting hungrier for credit

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