Ten firms contact body to review credit appeals

THE CREDIT Review Office, which was established by the Government six weeks ago to address the issue of access to finance for businesses, has received 10 applications to date.

The office, which is headed by John Trethowan, was established by the Government in early April in response to concerns that viable businesses were being denied credit by banks.

Mr Trethowan said that while the number of applications was low, there had been a steady stream of inquiries and he expected applications to increase once the economy improved and there was a greater demand for working capital. The office reviews loan applications made by SMEs, farm owners and sole traders up to the value of €250,000.

Businesses that have had their application for credit refused or reduced and feel that the bank’s decision is unjustified can apply to the office once the borrower has already gone through the bank’s own internal loan appeals process.

While the body has no statutory function, Mr Trethowan said banks are co-operating with it.

Mr Trethowan also confirmed that he has received lending plans from Bank of Ireland and AIB.

Under the terms of the bank recapitalisation plan, the Minister for Finance announced at the end of March that AIB and Bank of Ireland were required to provide up to €3 billion in credit facilities to SMEs in 2010 and 2011. He stipulated that banks were to submit plans within six weeks, which would be reviewed by Mr Trethowan.

Mr Trethowan has confirmed that he has received draft plans from both banks and will report to the Minister for Finance on the progress of the committee by the end of June.

Separately, Minister for Enterprise, Trade and Innovation, Batt O’Keeffe said yesterday that he has written to the country’s top bankers, requesting them to meet him to discuss lending practices, following reports that some small businesses were being “stone-walled” when trying to access credit.

Mr O’Keeffe said some bankers were showing “little regard for Irish taxpayers and the Government. It is not acceptable that lip service be paid to Government demands of banks to lend to viable businesses,” he said.

Mr O’Keeffe is also to meet Mr Trethowan and will be “closely examining” the lending proposals from AIB and Bank of Ireland, he said.

The Irish Small and Medium Enterprises Association (Isme) gave a cautious welcome to the announcement by the Minister that he is to meet senior bankers.

Isme’s head of research, Jim Curran, said while “on the face of it, the announcement should be viewed in a positive light”, the SME sector had long been promised decisive action by Government to address the issue of credit, with no progress to date.

“It is imperative that the Minister is true to his word and intervenes to force the banks to start opening up lending channels to small businesses,” he said.

“Any banks that fail to comply should automatically be refused any further state assistance, with regard to their recapitilisation programme.”