There has been a decrease in refusal rates for Irish small and medium sized enterprises (SMEs) seeking finance.
In its Quarterly Bank Watch Survey, published on Monday, the Irish SME Association (ISME) said the results show a decrease in refusal rates and a drop in demand for credit, while the waiting time from decision to drawdown remains unchanged at six weeks.
The main findings from the 524 respondents in the second-last week of March found that 31 per cent required additional or new bank facilities in the last three months, compared with 42 per cent in the previous quarter.
Almost a quarter of companies who applied for funding in the last three months were refused credit by their banks, a decrease on the 32 per cent during the final quarter of last year.
On average, businesses are waiting four weeks for an initial decision on loan applications. The wait time for drawdown remains at two weeks.
Almost a quarter of initial bank decisions were made within the first week, which was an increase from 23 per cent on the previous quarter. Almost half are waiting four to six weeks, while 6 per cent are waiting more than 10 weeks
Some 47 per cent of those who required funding made a formal application, a decrease from 63 per cent in the previous three months, while informal applications increased from 73 per cent to 77 per cent.
Just over two out of five respondents “had cause to be concerned” about bank fees and charges.
More than half said the Government was having a negative or no impact on SME lending, a decrease from 64 per cent on the previous quarter.
Some 7 per cent of businesses reported that their debt has been sold by their lender to another institution.
ISME chief executive Neil McDonnell said access to finance was “critical” for SMEs.
“While we welcome the reduction in the number of refusals, access to finance remains critical for many SMEs,” he said. “Even when finance is available, it comes at a significant premium to that paid by SMEs in peer countries, and with more strings attached.
“So even when our SMEs are successful in acquiring credit, they are penalised with higher costs and unjustifiable conditions.
"The latest Central Bank SME Market Report shows the difference between Irish banks and European banks. It costs an average of 5 per cent for an Irish SME to borrow €250,000 from a bank, compared with only 3.3 per cent across most of Europe."
Separately, a survey of more than 250 business owners found 40 per cent are still waiting to feel the positive impact of the upturn in economic fortunes.
“What’s interesting is that 8 per cent of SMEs have reported a change in their economic fortune for the better over the last two years,” said Marc O Dwyer, chief executive of Big Red Cloud, which carried out the survey.
“Worryingly, 40 per cent revealed that they are still struggling. Encouragingly perhaps, 20 per cent of these businesses believe they will be in a better position by the end of 2018.”
