SFA Calls for increased competition in the financial sector

Friday, 6 November 2015

SFA Annual Lunch 2015
Guest of Honour, Central Bank Governor, Patrick Honohan

Speaking in advance of the SFA Annual Lunch which takes place today, with Central Bank Governor, Patrick Honohan as Guest of Honour, SFA Chairman, AJ Noonan stated “The Central Bank must ensure that Ireland is an attractive place for finance providers to trade and do business. Everyone in business would agree that accessing the correct funds at the right life-stage of a business is critical to its survival. In addition to its other functions, the Central Bank has a critical role to play in regulating the financial services sector to ensure that small businesses are getting sufficient funding. In Europe, this is particularly important as two-thirds of small business finance is from bank debt vs equity; the exact opposite to the experience in the US.”

“Initiatives that we have worked on with Government such as the Strategic Banking Corporation of Ireland, Microfinance Ireland, the Credit Review Office and the credit loan guarantee scheme are all vital parts of our financial system moving forward. But we need more on-lenders and alternative providers of finance, including crowd funding, invoice-discounting and asset finance amongst others in the market", commented SFA Chairman, AJ Noonan.

SFA Chairman, AJ Noonan noted that “whilst we have thankfully now returned to a more ‘business as usual scenario’ with the mainstream banks, we are facing problems with the much reduced competition in the market. The cost of finance here is much higher than in competitor European economies. Small businesses here pay 2.3% more in interest rates than the eurozone average and this is unsustainable. Equally the risk averse nature of banking means that we are seeing much greater requests for personal guarantees. Where there is adequate equity in a Business, there is no need for a personal guarantee.”

SFA Chairman, AJ Noonan continued “We also know that we have an equity gap, which has not been solved with the VC and business angel model we currently have here in Ireland. What is really needed is a tax incentive that works for ordinary people, including family, friends and other small business owners and individuals, which make it more attractive for these individuals to back small businesses vs falling into the cycle of just buying another apartment. The obvious vehicle for this is the EIIS scheme which needs to be simplified so that the small business community can actually use it.”

In conclusion, SFA Chairman, AJ Noonan commented: “Ireland has once again transformed itself into a successful and growing economy. Much of this progress is down to our members, owner-managers, who have shown great entrepreneurship, perseverance, innovation and leadership, over the past decade. Regardless of its political make-up, we must ensure that the next Government really does put small business at the heart of its policy-making and we will be mounting a grass roots campaign amongst the 200,000 small businesses, employing 860,000 people in every part of Ireland, to make our voice heard in the forthcoming general election”.

For further comment, please contact AJ Noonan, SFA Chairman, on Tel: 086 2592610.

Issued by:

Patricia Callan, Director, Small Firms Association at Tel: 01-6051602 or 087-6999345, e-mail: patricia.callan@sfa.ie or Tweet: @SFA_Irl