The independent report commissioned by the Department of Finance on the demand for credit by Small and Medium Enterprises (SMEs) published today shows:
36% of SMEs surveyed requested bank credit in the period April-September 2011.
When applications pending were excluded, 70% of those requests were approved.
In relation to the 64% of SMEs who did not request bank credit in this period:
80% did not need credit or had sufficient internal reserves,
While 7% believed the banks were not lending.
During the review period, 48% of SMEs reported a decrease in turnover while 26% reported an increase.
Welcoming the report for the further clarity it brings to the pattern of credit demand by the important SME sector, the Minister for Finance, Michael Noonan TD said:
"This report will further enhance the ability of my Department, along with the Credit Review Office, to understand the business environment in which SMEs operate and their relationships with the banks. The results of this survey will be a valuable resource in informing policy decisions in this area and will be of benefit to all stakeholders.
I am determined that the lending targets set by the Government for the two domestic pillar banks for the three calendar years, 2011 to 2013, will be achieved. In order for these targets to be met, I would encourage SMEs to approach the banks with viable business plans. SMEs should seek the available assistance from Government Agencies, such as Enterprise Ireland and the County Enterprise Boards, in order to ensure that their business plans are developed as far as possible.
The Government recently announced details of a Micro Finance Loan Scheme and a Temporary Partial Credit Guarantee Scheme to assist viable SMEs on the margins of commercial lending decisions in accessing additional credit. These Schemes will be in place from the first quarter of next year, and will be particularly welcome in light of the findings of this report in relation to micro-enterprises.
It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.
The Minister thanked all of those involved in preparing the report, particularly the small and medium sized enterprises that took the time to engage with the market research company in providing this essential information on credit demand amongst this important sector