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ISME chief executive Mark Fielding at the jobs committee today Oireachtas TV

"They've replaced the tellers with plants" - are banks interested in lending to small business?

Domestic banks are failing to support a vital segment of the economy, lobby groups have said.

IRISH BANKS ARE understaffed, too risk-averse and ill-equipped to deal with the demands of the Small and Medium Enterprise sector, a Dail committee has been told.

The committee on jobs, enterprise and innovation heard from Mark Fielding of the Irish Small and Medium Enterprises association, who said that bank staff lack the expertise to make informed lending decisions for small businesses.

Citing the example of an ISME member who was seeking a lathe for metal working, Fielding said that the response from the banks relationship manager was:

‘We’re sorry, but we won’t be funding finance for your latte this year.’ That’s the type of experience we have.

He continued: “Even going into a bank now…you go up to your local branch in Carrick-on-Shannon and two of the tellers have been replaced with plants.”

Onerous demands

Fielding went on to detail cases of ISME members who had been refused loans under ‘unjustifiably hard’ conditions. They included:

  • A bank looking for guarantees of €800,000 for a €60,000 loan
  • A bank not accepting €550,000 security against a €100,000 loan

He said that surveys of ISME members had shown that using the family home of a small businessperson as collateral has been brought into discussions to 15 per cent of occasions, and the bank has asked for the family home as collateral 11 per cent of the time.

“Yellow pack relationship managers”

Fielding said that staff facing SME owners in branches are not up to scratch.

“It’s not so much the ability of the SME but the calibre of the yellow pack relationship managers in banks, who between them can’t read a set of figures, are frightened by the word risk, and scared of making a lending decision.”

AJ Noonan of the Small Firms Association agreed, saying that “banks have credit departments where risk is feared.”

Challenge to bank figures

He challenged official figures from Bank of Ireland, AIB and Ulster Bank which claimed approval rates of between 80 and 90 per cent for SME loan applications.

ISME’s bankwatch survey of its members found that 54 per cent of SMEs who had applied for lending from banks in the 3 months ending in February were refused credit from their banks.

SFA chairman AJ Noonan said that 31 per cent of SFA members felt their relationship with their bank had disimproved, while 29 per cent reported an increase in the cost of working capital.

He said: “The great majority feel that the relationship is missing from the relationship manager title. They want someone…who responds effectively.”

Fielding also criticised the practice of what he termed “effective refusal” of loans, whereby banks turn down or advise against an application without officially processing it, thereby artificially deflating their refusal rate.

Noonan said that many loans are approved “on the basis that approval levels remain high, but there really is no danger of the funds ever being drawn down”.

The ‘long no’, when banks constantly return with more questions and criteria to borrowers was also criticised by members of Ibec giving evidence to the committee.

Small business stranded by foreign bank exit>

‘SSIA for SMEs’ could unlock €90 billion funding pot>

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30 Comments
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    Mute Gordon Hughes
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    Jan 5th 2020, 9:04 AM

    Best way to dispose of a Christmas tree is to bring it out your back garden and launch it in your neighbours garden, then act like you know nothing about it if they say anything, this is also a green eco friendly way too as you don’t need to drive anywhere in your car …. Your welcome

    424
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    Mute Fergal O'Hagan
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    Jan 5th 2020, 10:20 AM

    @Gordon Hughes: *YOU’RE

    85
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    Mute Gordon Hughes
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    Jan 5th 2020, 11:16 AM

    @Fergal O’Hagan: you’re boring…. See I learn quickly

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    Mute Fergal O'Hagan
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    Jan 5th 2020, 11:50 AM

    @Gordon Hughes: you are welcome!

    15
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    Mute Gordon Hughes
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    Jan 5th 2020, 4:50 PM

    @Fergal O’Hagan: you are still drab.. I’m flying now

    12
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    Mute Sean Ryan
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    Jan 5th 2020, 9:29 AM

    My local secondary school offers collection and disposal for €10. The boys collect it and the profit goes towards the school football club.

    158
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    Mute Jane Alford
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    Jan 5th 2020, 10:31 AM

    @Sean Ryan: Best to let it completely dry out first…

    6
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    Mute Vladimir Macro
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    Jan 5th 2020, 10:37 AM

    @Sean Ryan: scandalous

    6
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    Mute Wheresmyjumper
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    Jan 5th 2020, 9:17 AM

    I’m throwing mine over the back wall and letting nature take care of it, it’s a tree i reckon driving it to the council drop off would have more of a negative impact on the environment

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    Mute Gordon Hughes
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    Jan 5th 2020, 11:21 AM

    @Wheresmyjumper: I said that already

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    Mute Tim McCormack29
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    Jan 5th 2020, 8:06 AM

    I am going cut it up and burn it in my stove..

    231
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    Mute dublindamo
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    Jan 5th 2020, 9:32 AM

    @Tim McCormack29: didn’t think this type of green tree was good for a stove

    38
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    Mute Gussy Hughes
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    Jan 5th 2020, 10:03 AM

    @dublindamo: Ah damo, it’s only once a year. Everything in moderation!

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    Mute Whoswho
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    Jan 5th 2020, 3:26 PM

    @Gussy Hughes: Who answers all these polls? Get a life!

    1
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    Mute Brendan Doherty
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    Jan 5th 2020, 10:08 AM

    Mine is recycled in the attic ready for next year no harm to the environment at all

    51
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    Mute Marie Louise Ryan
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    Jan 5th 2020, 11:43 AM

    @Brendan Doherty: only its made of plastic

    25
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    Mute Chris lynch
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    Jan 5th 2020, 11:47 AM

    @Marie Louise Ryan: a plastic one is environmentally neutral if you keep it for about 10 years. Wasn’t there an article here about that recently?

    56
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    Mute Colm Curran
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    Jan 5th 2020, 9:52 AM

    I’ll treecycle mine I’ll get my coat

    40
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    Mute Shane Freeney
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    Jan 5th 2020, 9:40 AM

    My Goats are loving it they will be munching for days

    33
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    Mute Aonghus OReilly
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    Jan 5th 2020, 11:47 AM

    @Shane Freeney: You said goatmunching.

    13
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    Mute Eugene Comaskey
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    Jan 5th 2020, 10:29 AM

    Trees melt away after they are felled if left alone , just throw it at the back of the ditch.

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    Mute Liam Mc Meel
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    Jan 5th 2020, 8:07 AM

    No

    20
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    Mute Misty Eyed Mutton
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    Jan 5th 2020, 4:09 PM

    One of my footmen is towing the 60 footer as I type.

    14
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    Mute Datalore
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    Jan 5th 2020, 9:54 PM

    Bound mine in a few black refuse sacks and brought it to Corkagh Park. Looks like a body bag

    5
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    Mute Anthony Mc Donald
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    Jan 5th 2020, 3:50 PM

    I don’t buy fresh Xmas trees have my personal reasons as in environmentally

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    Mute Morning Gus
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    Jan 5th 2020, 10:15 PM

    Why do you want to know this?

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    Mute Garykelly
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    Jan 5th 2020, 10:25 PM

    Yeah we heard you the first time chief

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    Mute Rory M
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    Jan 5th 2020, 11:56 AM

    There is lots of drop of points for old real xmas trees and its usually designated to the corner of a field The Council , corporation , fingal etc all are involved and the shredded trees get re used in the gardening sector , so it makes sense to look up your local authority NO MATTER whether your on Southside, Northside or any part of dublin .
    USE AND RECYCLE

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    Mute Datalore
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    Jan 5th 2020, 9:54 PM

    Bound mine in a few black refuse sacks and brought it to Corkagh Park. Looks like a body bag

    1
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    Mute Datalore
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    Jan 5th 2020, 9:54 PM

    Bound mine in a few black refuse sacks and brought it to Corkagh Park

    1
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    Mute Morning Gus
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    Jan 5th 2020, 11:07 PM

    @Datalore: Come again!!!

    6
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