SFA Comment on SME Credit Demand Survey

Wednesday, 26 June 2013

Access to Finance remains vital for small business survival and jobs

Application process needs to speed up and reasons for decline clarified

Cost of credit cannot act as a deterrent to business investment


“It is critical that in providing finance to the small businesses that the cost of credit is not too high and that loan terms and conditions are clear and manageable and do not act as a deterrent for business survival and investment.” Avine McNally, Acting Director, SFA.
The Small Firms Association, has welcomed the Department of Finance “SME Lending Demand Survey” report. While demand remains low an increasing number of SMEs are now seeking credit (40%), of which 76% of applications had been approved by the banks.

Avine McNally, Acting Director, SFA said a worrying trend from the survey is that more conditions are being attached to credit approvals, these range from conditions of personal guarantees; facility charges and other specific security. “It is critical that in providing finance to the small businesses that the cost of credit is not too high and that loan terms and conditions are clear and manageable and do not act as a deterrent for business survival and investment.”

While future demand slightly decreases, 26% of small firms will be seeking finance over the next 6 months. McNally said “we need to ensure that the finance required is supporting challenging but viable entrepreneurial businesses to create sustainable businesses and employment.”


In particular, McNally noted that the majority of applicants (77%) who have been declined credit don’t agree with the decision. In addition, the time for a decision averaged 21 working days, with just over half of the applications processed within the target of 15 days.

“It is critical in rebuilding the small business banking relationship, that clarity is given around decision-making rationale and that process targets of 100% of applications being dealt with in 15 days and all declines being informed of their right of appeal are achieved swiftly.”

Ends.

For further comment, please contact: Avine McNally, Acting Director, SFA Tel 01 605 1633 or 087 645 02 05.
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