CASH FLOW problems remain rife among small businesses as banks continue to restrict credit, according to the Small Firms Association (SFA).

The representative group for small business in Ireland has repeated its calls for Government intervention, arguing in its autumn economic statement there is “clearly a market failure” in the provision of loans to small and medium enterprises (SMEs).

One-fifth of its members have seen the amount of working capital available to them decrease in the last three months, said the SFA.

It wants the Government to share lending risks with the banks under a credit guarantee scheme similar to those that operate in other countries.

SFA director Avine McNally also called on the Government to prioritise the restoration of competitiveness on the cost of public utilities such as water, electricity, gas and transport.

“Small Irish businesses have taken harsh steps to regain cost-competitiveness, yet many costs remain outside their control as they are Government-influenced.

“When these costs are passed on to the rest of the economy, competitiveness and jobs are lost,” said Ms McNally.

The SFA wants local authority reform to be put in place before any business rates are increased.

“While we strive to be confident about the economy, there are still signs of concern,” Ms McNally said. Chief among these, she cited a weak and uncertain labour market, the continued fall in house prices and further cuts in Government expenditure.

“On the positive side, the external economic environment is gradually getting stronger and the challenge is to ensure that the Irish economy and Irish small businesses will be in a position to exploit this recovery.”

The Central Statistics Office is scheduled to issue a fresh update on the labour market on Thursday, when it publishes the Live Register of unemployment benefit claimants for July.