Thursday, 26 September 2013
- SFA Welcomes Credit Review Office Report
- SME Loan Restructuring a challenge
A key challenge moving forward is for the banking sector to effect real and meaningful debt restructuring where there is a substantive viable core business. Avine McNally, Acting Director, SFA.
The Small Firms Association has welcomed the report from John Trethowan, of the Credit Review Office, and said that the report shows that the pillar banks are open for business. However, Avine McNally, Acting Director, stated “We now need to see them lending to more challenging but viable businesses to ensure they can access the credit they require for working capital and investment.”
A key challenge is for the banking sector to effect real and meaningful debt restructuring where there is a substantive viable core business. “While lending solutions must be found to allow SMEs deal with their legacy debt, we must ensure that in this process viable business are supported to ensure survival.”
This is not an easy process to undertake, as it will require not alone financial and banking skills, but will require knowledge of the business sector and environment and an appetite for enterprise risk,” commented McNally.
McNally said a worrying trend regarding credit 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.”
McNally highlighted that the front line experience is still an issue, “banks still have a long way to go in standardising customer experience at branch level. It is critical in rebuilding the small business banking relationship, that communications are improved, that clarity is given around decision-making rationale and that process targets of 100% of applications being dealt with in 15 days are achieved”, said McNally.
In conclusion, McNally said “27% of our members view access to credit as a key priority in 2013. Their survival and the jobs they provide will depend on a properly functioning business banking market returning. This must remain a key pillar of Government policy delivery”.
For further comment, please contact: Avine McNally, Acting Director, SFA Tel 01 605 1633 or 087 645 02 05.