merrion street

SMEs must be granted realistic time period to complete legal requirements between loan approval & loan expiry date

John Perry T.D., Minister for Small Business, has welcomed the publication of the Central Banks revised Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code).

While welcoming this framework which sets out new requirements for lenders to deal more efficiently with businesses that find themselves in financial difficulty, many small businesses are still contacting the Minister about the frustration they are experiencing in trying to access credit.

"A number of small businesses have recently contacted me about another obstacle they are experiencing in trying to access finance. They refer to the short amount of time allocated by the banks between a loan application being approved and the deadline given to complete the complicated legal process before they can draw down that offer.

"Some businesses are being told their application for credit has been approved at a very late stage in the process, resulting in the business not having enough time to follow the legal procedures to draw down their loan, before the offer expires.

"I am calling on each banks legal department to not frustrate the loan application process. It is important that the legal specifications are proportionate to the size of the company and the amount of the loan being applied for. The legal process must not be over restrictive or be used as a time-delaying process. A business must be given a realistic period of time to ensure that they can complete the legal requirements necessary before the loan period has elapsed.

"Banks must be prepared to create a more business friendly banking environment and work with their SME clients to help them achieve their goals. Access to finance can mean the difference between survival or failure for many viable new start ups and existing small businesses.

"It is imperative that we listen to the voice of small business. The dedication and perseverance of business people running locally traded companies and the positive contribution they make to the lives of Irish people throughout the regions should not be underestimated. They are crucial to the enhancement of Ireland’s overall competitiveness and growth and should not be overlooked.

"The taxpayer has invested significantly in the banking system and the banks must recognise their full responsibilities and actively support small businesses that are driving forward recovery in the real economy."