Sir, – As the owner/manager of a successful IT services company, I have been fortunate in having the support of my bank, which has provided overdraft facilities and has indicated a willingness to lend for other projects. However, the issue is not so much the availability of credit as the cost.
Like most businesses, successful or otherwise, we have constant pressure on margins. When margins are tight, the cost of money is a significant issue. Banks can borrow, either from depositors or the ECB, for rates of less than 1 per cent, but they then seek to lend it to business at rates of between 10 per cent and 12.5 per cent. Unless a business can make a margin greater than 12.5 per cent on goods or services, borrowing to fund a project can clearly be seen to lead to a loss on that project and so the project will not go ahead.
Can anyone explain why efforts at European Central Bank level to stimulate growth through low interest rates are not being reflected in low interest rates on business loans? Oh wait ... Yours, etc,
JOHN BROPHY,
Managing Director,
Carrig Solutions,
Rathnew,
Co Wicklow