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OVER HALF OF companies applying for bank loans in the first three months of the year had their applications refused
A new survey by the Irish Small and Medium Enterprises association (ISME) found that 52 per cent of companies were refused, down marginally on the 54 per cent refusal rate in the last quarter of 2013.
ISME chief executive Mark Fielding said that SMEs are on a finance ‘hunger march’.
How can we even hope to beat the recession when our SMEs are being refused bank loans and even when ‘lucky enough’ to get a loan, are hit with over-stringent collateral requirements and higher interest rates?
He said that acceptance rates published by banks are ‘sugar-coated’, and called on the Government to exert more pressure on banks to lend to SMEs.
Application rates down
Dispirited SME owners are turning to banks less and less, the survey also revealed.
Only 32 per cent of respondents had applied for a loan so far this year, down from 39 per cent in the previous three years. It is the lowest level since June of 2011.
Just under half of the respondents said that they were discouraged by their bank from making an application.
Fielding criticised the staffing standards in bank branch networks throughout the country, referring to relationship managers as “yellow pack”.
“They can’t read a set of figures, are frightened by the word risk and scared to make a lending decision for fear of career reprisal.”
Bank reliance high
ISME called on the Government and the central bank to rush through the €500 million Strategic Bank Corporation in the immediate future, and to look at ways of introducing non-bank finance options for SMEs.
Pointing out that Irish small businesses are reliant on bank finance for 60 per cent of their funding needs, compared to an EU average of 39 per cent, Fielding argued that the financial fragility of the sector must be solved as a priority.
“It is…important that alternative sources of finance and alternative methods of financing are encouraged for Irish SMEs. In essence, as well as right-sizing their business, SMEs must begin to ‘right-size’ their finances.”
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€500 million is supposed to keep the SME sector afloat?
A drop in the ocean… Which is where this Government dropped us. Prioritising unsecured bond holders was a huge mistake.
Mistake would imply it wasn’t deliberate, let’s call a spade a spade, it was treason
This is 6 years after Lehmans!! Wonder what Mr.Noonan will say?
I’m sure as we speak Noonan is waiting on what to say to be delivered by the banks to him.
I’m sure Noonan will be along shortly with his usual drivel and crocodile tears about the SMEs.
Nothing more than a bunch of gangsters!! Robbing the people and protecting the elite
SME’s include the retail sector and you only have to look at the high streets in most Irish towns to realise the devastation which is still ongoing. Empty units all over the place tell their own story. The banks have done nothing to help under the purge of austerity. Meanwhile a property explosion is gearing up in Dublin. If, as many commentators predict, another recession comes Europe’s way again the situation will be far worse in this country than last time. The service and retail sector are crying out for help but all the wrong decisions are being made. ….rates….planning…..taxes and credit from the banks. What a woeful situation it is and being completely ignored by the government. And the people who work and run these business’ are working long hours with little return and are growing ever more disillusioned. Something needs to be done.
Why would the bailed out banks lend to SME’s .Pretty obvious they dont want to what is obvious though is that they want to drive SME’s out of business take their property and have their debt on the books. Corporate takeover with interest .
Out of interest… Can anyone provide a copy of this survey ? I’d be really interested in seeing how leading the questions are… People in the industry who I know tell me very different to what’s recorded above. They actually tell me they have very few declines… varies between 1-2 out of 10. Requesting additional information to support a credit decision does not mean a decline … I wonder how many fall into that category.
The actual survey questions are not included within the survey …
What % of the refused applicants are viable businesses?
There is good reason to refuse credit if the business asking for a loan is a basket case.
Could a significant factor in this be the belated development of proper credit reporting in Ireland. I used to live in the UK and Experian and Equifax know absolutely everything and I mean absolutely everything about you down to the very last penny of your overdraft and credit card bills. If you have late payments, outstanding bills or are seeking to push your limits your chances of securing new lines of credit are zilch.
How many of those complaining about being turned down for credit are actually in a financially stable position, paying all bills on time, assets to secure loans, evidence of regular income etc.
Wanting or even needing new lines of credit doesn’t entitle you to them.
What bank do you work for ‘the truth hurts ‘ or are you too ashamed to show your true identity ?
I don’t work for any bank. I’m entitled to online privacy if I want; is there any particular reason why you’d be interested in my identity Eugene?
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