The number of succesful loan applications by enterprises in Ireland fell to 50 per cent last year, new data from the Central Statistics Office showed today.
The figure was down from about 90 per cent in 2007, before the financial crisis hit the country.
The survey questioned businesses on three different types of finance they were seeking to obtain: loan finance, equity finance and finance other than loan and equity finance.
Enterprises that applied to banks for loan finance saw their success rate drop to 55 per cent, from 95 per cent in 2007.
The number of enterprises seeking loan finance fell over the period, with 37 per cent of all enterprises seeking it in 2007, compared with 31 per cent last year. The biggest fall was in the construction sector, where there was a 9 per cent drop in the number of enterprises seeking loan finance to 36 per cent.
A marginally higher number of businesses were seeking equity finance, with 3 per cent in 2007 rising to 4 per cent in 2010. The share of those seeking finance other than loan and equity finance rose marginally from 20 per cent to 21 cent.
The reasons why banks have refused loans - wholly or partially - have changed over the period. In 2007, a lack of capital and insufficient or risky potential were cited as the primary reasons. However, in 2010, banks were refusing applications mainly because enterprises had too much debt. As many as 19 per cent of applications were not given a reason for refusal last year, compared with 9 per cent in 2007.
NCB Stockbrokers chief economist Brian Devine said the research would probably be interpreted by media as "an indication of banks not lending and that they should be lending more".
"The problem with the banking system is that banks lent recklessly in the past and they should not be forced to make the same mistakes again. The main reason given by banks for refusing a loan in 2010 'was that enterprises had too much debt'. More debt for an overleveraged enterprise in aggregate (ie the Irish economy) does not solve the problem," he wrote in a note.
"Having said this there does not to be sufficient capital available to those business which have a viable future and require capital to ensure that the future can be fulfilled. The problem for the Irish economy at the moment is that credit standards are too strict but also that the real cost of credit is too expensive. This will continue to be a drag on the economy as the banks deleverage and the sovereign remains in the doldrums in the eyes of debt investors."
Some 60 per cent of enterprises said financing would be needed to maintain their business in the period until 2013.
