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Majority of SMEs who requested credit from banks were approved

A total of 60 per cent of small businesses which applied for credit were successful according to the Red C poll.

Image: alexskopje via Shutterstock

A SURVEY CARRIED out for the government has found – somewhat unexpectedly – that the majority of credit applications by small and medium businesses were approved.

A total of 60 per cent of credit applications by SMEs were approved or partially approved while 19 per cent of applications were declined according to the independent survey conducted by polling company Red C. 21 per cent of applications were still pending.

The study found 39 per cent of respondents had requested credit during the specified period, with most looking for money for cash flow and working capital purposes.

Of the businesses who did not request credit, 6 per cent did not do so because they believed that the banks are not lending.

There has been much debate over whether the biggest banks in the country – which were bailed out by the State and are majority State-owned – are lending.

Unsurprisingly, almost 80 per cent of businesses who were refused credit did not agree with the reason provided by the bank for the refusal. In 69 per cent of cases where formal applications were declined, the bank did not inform the borrower of the right to internal review.

The survey was carried out by Red C between April and September 2012 and collated responses from more than 1,500 respondents.

Minister for Finance Michael Noonan said that he hoped the survey results would give confidence to SME owners and managers to invest in their businesses.

Earlier this year research published by the Central Bank found that Ireland had the second-highest rejection rate for loans to small businesses in the eurozone.

Read: Research says Ireland has second highest rejection rate for SME loans >

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