SFA Comment on SME Credit Demand Survey December

Tuesday, 3 December 2013

Access to Finance remains vital for small business survival and jobs

Application process needs to speed up and reasons for decline clarified

Conditions 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. Demand for credit has fallen and remains low only 36% of SMEs are now seeking credit, of which 64% of applications have received full/partial approval 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, 78% of respondents who had credit approved sated that conditions were attached - 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.”

McNally noted that the majority of applicants (73%) 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.”

McNally concluded “access to finance is still vital and the banking system needs to ensure that the finance required to supporting challenging but viable entrepreneurial businesses to create sustainable businesses and employment.”

Ends.

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

EDITOR’S NOTE
The Small Firms Association (SFA) is the national organisation exclusively representing the needs of small enterprises (i.e. those employing less than 50 employees) in Ireland. The organisation works with government and policy makers nationally and internationally, to ensure that the economic environment is conducive to small business establishment and development.
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