THE HEAD of the Government-established Credit Review Office has questioned the quality of loan applications and financial information submitted by small firms seeking loans from the banks.

Former banker John Trethowan said some small and medium-sized businesses had failed to include detailed information showing their projected cashflow to secure new bank loans.

Publishing the office’s fifth quarterly report, Mr Trethowan disputed surveys and comments from pressure groups representing small businesses, saying there was no reliable survey measuring the level of demand for credit.

The Department of Finance was planning to create a survey to measure demand every three to six months, said Mr Trethowan.

Existing surveys that purported to measure demand were “not statistically sound” and could present a “distorted answer”, he said.

In some cases, the problem of loan refusals lay in small businesses not providing detailed information such as cashflow forecasts and business plans to secure loans.

“It is all very well playing the blame game and pointing the finger but if you haven’t got a well-constructed request to a bank for credit, then it makes it difficult for them to help you,” he said.

The Credit Review Office, which was set up by former minister for finance Brian Lenihan under the Nama legislation, upheld decisions by Bank of Ireland and AIB to refuse loans in 27 cases.

In a further 30 cases, the office disputed the banks’ decisions and credit was subsequently provided by the banks.

More work on the application was required by the borrower or the application was withdrawn in seven cases. Three refusals were overturned during the banks’ internal loan review processes.

Mr Trethowan said it would be a challenge for Bank of Ireland and AIB to each meet their €3 billion target of new lending this year due to “slacker demand for credit” and a greater focus on loan repayments by small businesses.

The Irish Small and Medium Enterprises Association dismissed the claims of a fall-off in demand for loans from companies.

Chambers Ireland and the Irish Banking Federation are developing a website for small businesses to provide information that they need to finance themselves.