SMEs urged to consider alternative funding options more seriously

Official data from the Central Statistics Office suggests that as much as a third of Ireland’s small businesses still choose to go to banks for their finance, with SME owners urged to investigate alternative finance routes that may better suit their needs.

The figures showed that 20 per cent of micro enterprises opted for bank finance in 2014, while 35 per cent of small firms and almost 40 per cent of medium-sized enterprises also went down the route of bank lending.

The Strategic Banking Corporation of Ireland (SBCI) claims Irish SMEs are currently more dependent on banks than SMEs in other EU nations and that alternative funding options need to be more seriously considered in order to pay less to borrow.

Nick Ashmore, chief executive, SBCI, said: “Irish SMEs have been paying more to borrow than similar businesses across Europe.

“The SBCI is addressing this by introducing new low-cost, SME-friendly financing options to the Irish market and Irish SMEs should look at the growing number of financing options – both bank and non-bank – to see what best suits their needs.”

Just recently the SBCI partnered with two alternative finance lenders, Finance Ireland and Merrion Fleet, to provide a new range of low-cost SME financing options from leasing and hire purchase to fleet finance.

The official data from the Central Statistics Office also showed that more than half (50.1 per cent) of all bank finance applications indicated that the finance was to be used by SMEs as working capital.

Additionally, almost two-fifths of applications for alternative finance and a third of applications for equity finance also specified the need for more working capital.

Alternative reasons for seeking bank and non-bank finance included investment in property, export growth and intangibles.

Last updated: 5th April 2016