TAOISEACH ENDA Kenny yesterday confirmed the Government’s commitment to introduce a loan guarantee scheme for small businesses, as lobby group Isme claimed that almost half of all businesses were refused credit in the last three months.
While the Taoiseach declined to give a specific timetable, the scheme is not expected to be in place until the autumn at the earliest, due in part to possible legislative changes involved. The Taoiseach is also due to launch the Government’s new small business advisory group on Thursday.
In its quarterly Bank Watch Survey published yesterday, Isme said companies were increasingly being refused credit, rising to 54 per cent from 48 per cent in the previous quarter.
Some 72 per cent of firms and traders it spoke to believe banks are making it more difficult for them to access finance, down from 79 per cent, and 14 per cent claimed they had been forced to accept changes to banking facilities in the last quarter. This included rising interest rates and reductions in overdrafts.
Those who successfully increased credit facilities found banks required increased collateral, the survey found, while others were forced to pay higher rates and charges.
“The results of today’s survey clearly show that the problem of reduced access to credit for SMEs has returned to the worst figures since the crisis began,” Isme chief executive Mark Fielding said.
The survey was carried out in the week ending June 10th and includes responses from 882 sole traders and small firms.
The Irish Banking Federation said the survey did not provide a “complete or accurate account” of the demand for credit.
The group, which represents the financial services sector, cited the quarterly report from the Credit Review Office, which found that loan approval rates for the banks covered by the reports were 88 per cent, and the Central Statistics Office’s recent report on access to finance covering 2007 to 2010, which indicated that 74 per cent of loan applications were fully or partially approved.
“While fully cognisant of the need to support the SME sector as a key driver of our economic recovery, the ongoing consideration for all lenders must be the viability and thus the bankability of the credit applicant,” said federation chief executive Pat Farrell.
