Loan approval rate for Ireland's SMEs at highest level in four years

A new report into credit approval found that more small firms are being approved than rejected for the first time in four years.
 
Within the latest 'Bank Watch' survey from trade group, ISME, more than half (52 per cent) of applications were approved by the banks in the last three months, compared to 44 per cent at the turn of the year.
 
It is the first time since 2009 that the survey has revealed more credit approvals than refusals to Ireland’s small firms, while the waiting time for processed applications also dropped from five weeks to four.
 
ISME confirms that, unsurprisingly, demand for credit from small firms is on the rise. The latest 'Bank Watch' report claims more than 40 per cent of respondents had requested additional or new bank facilities in the last three months, a five per cent increase on the previous quarter.
 
Mark Fielding, CEO of ISME, confirmed the survey showed "positive" signs of the beginning of a trend "back to 'normal' banking".
 
"However, the fact that both interest and charges are increasing across the board emphasises the fact that we must maintain a close eye on the bankers in the reduced market, with only two-and-a-half main banks servicing the SME sector," he added.
 
Despite the increasing desire to obtain credit, 95 per cent of Ireland’s small firms surveyed felt the Government had little or no impact on how much credit is available to small firms, with less than two-thirds (60 per cent) of SMEs aware of the Government’s credit guarantee scheme.
 
Mr Fielding called on the Government to set up a strategic investment bank directly aimed at the small business sector.
 
He said: "The need for a new, active and relevant actor in the business credit space is further emphasised by the fact that financial constraints are currently at their most binding, just when capital demands are starting to pick up again."

Date published 13 Jun 2013 | Last updated 13 Jun 2013