Minister Donohoe welcomes results of the latest SME Credit Demand Survey
- Survey shows Irish SME environment remains favourable
- Of those SMEs that did not access credit, 89% cited lack of credit requirements
- 7th year in a row that there has been an increase in reported number of companies making a profit
- 51% of SMEs report that women either own or are part owners of the company
The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, has today (Sunday) welcomed the Department of Finance’s publication of the latest in its series on SME Credit Demand Surveys, which covers the six month period April – September 2018.
This survey series is currently conducted by Fitzpatrick Associates in conjunction with Behaviour and Attitudes, on behalf of the Department of Finance. It is the most comprehensive survey of SME Credit Demand in Ireland, covering over 1,500 respondents through in-depth discussions.
The Department has conducted the SME Credit Demand Survey biannually since 2011 in order to have an independent and statistically significant report into the Irish SME landscape and the availability of, and demand for, credit that exists for SMEs.
Some of the Survey’s key findings include:
- While demand for credit has decreased to 20% in this survey, of those SMEs that did not access credit 89% cited lack of credit requirements as their reasoning;
- For the 7th year in a row, we have seen an increase in the reported number of companies making a profit; 72% of all SMEs reported a profit in the period;
- The survey registers little change in expected future demand for credit, with 19% of SMEs expecting to apply for finance in the next six months, compared to 20% during the corresponding period in 2017;
- The average cost of credit reported on outstanding loans has continued to decline, at 4.4%, down from 5.1% in September 2017;
- 76% of all SME credit applications were fully or partially approved at the time of surveying;
- Drawdowns continue to increase with 73% of respondents reporting that they have availed of their full credit facility, a significant increase compared to 60% in September 2017;
- 51% of SMEs report that women either own or are included as owners of the company. When asked if the Senior Manager or CEO of the firm was female, the response indicated that just under one in three of all SMEs are managed by a female. This rose to 33% for micro companies, but dips to 22% of all medium companies.
On the publication of the SME Credit Demand Survey Minister Donohoe said: ‘I welcome the results of the latest SME Credit Demand Survey, which shows that though credit demand is low, the number of SMEs reporting a profit has again increased, for the seventh year in a row. It is also more than timely that levels of female participation were captured. The survey has shown that while 51% of SME owners/part owners in Ireland are female, this decreases to 29% for female management of SMEs.
I would like to take this opportunity to sincerely thank all those businesses that took part in this survey. The SME Credit Demand Survey series is a valuable resource that allows us deepen our understanding of how to support our indigenous businesses, which are the backbone of our economy.”
Note for Editors:
Background of Report
The SME Credit Demand Survey has been conducted biannually since 2011 to monitor trends in access to credit by SMEs. Please note while the survey is conducted on a 6 monthly basis, for presentation purposes, the report uses year-on-year comparisons.
The Department has conducted the SME Credit Demand Survey in order to have an independent and statistically significant report into the Irish SME landscape and the availability of, and demand for, credit that exists for SMEs. The survey was conducted through a telephone survey covering over 1,500 businesses. It drew a carefully constructed sample from a large database of SMEs, made repeated calls to ensure a full response and asked factual questions. The full questionnaire is included in the report. The report and previous reports are available on the Department of Finance website at www.finance.gov.ie.
The report published today presents the results from the SME Credit Demand Survey April – September 2018. Conducted by Fitzpatrick Associates in conjunction with Behaviour and Attitudes, all interviews took place between October 26th and 6th December 2018.
86% of all businesses surveyed report increased or stable turnover in the past six months.
For the seventh year in a row, we have seen an increase in the reported number of companies making a profit.
The hotel and restaurant sector, along with the construction, business services and manufacturing sectors, have experienced the most pronounced improvements in turnover. Growth has however moderated amongst exporting businesses, where 53% report increased turnover in the six months to September 2018, down from 58% in 2017.
Demand for Bank Finance
The proportion of companies that applied for finance with one of the pillar banks has increased – from 76% of all those requesting bank finance in September 2017 up to 79% in September 2018.
5% of SMEs report having missed repayments of their loans in the past six months while 3% have adjusted their bank debt in the past six months. The main types of adjustments being made are repayment scheduling, rate reduction and term extension.
20% of SMEs requested bank finance in the past six months, down from 26% in March 18 and 23% in Sept 17.
79% of SMEs who applied for finance did so with one of the pillar banks, up from 76% in Sept 2017.
The proportion of credit applications that were declined stands at 13% in this survey, down marginally from 14% in September 2017.
Credit Support Awareness
Excluding ‘don’t knows’, the proportion of companies that were refused credit from the main banks, and said that they were informed of their right to a decision review by the Credit Review Office, stands at 69%.
A majority of SMEs are aware of Enterprise Ireland (86%), and Local Enterprise Offices (77%) support initiatives. 41% of SMEs are aware of the Credit Guarantee Scheme. 85% of those surveyed indicated that internal funds/retained earnings represent the primary source of working capital finance (an increase of four percentage points since 2017).
7% of those surveyed reported that they made enquires into non-bank finance, this percentage has been falling since September 2014.
62% of these requests for non-bank finance were either fully or partially successful, down from 66% in September 2017.