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Survey: 76pc of SMEs get loan approval

Wednesday, November 28 11:32:26

Over three quarters (76pc) of SMEs who applied to the banks for credit were approved in the April to September period, according to the latest Red C survey conducted for the Department of Finance.

It found that 39pc of SMEs surveyed had requested credit with 61pc did not with most of the demand being for cash flow and working capital purposes.

Of those firms that didn't request credit, 79pc did not need it or have sufficient internal reserves/funds and 6pc thought or believe the banks are not lending.

It found that 60pc of credit applications were approved or partially approved, 19pc of credit applications were declined and 21pc of credit applications are still pending.

The survey also found that 78pc of SMEs who were refused credit did not agree with the reason provided by the bank for the refusal.

In 69pc of cases where formal applications were declined, the bank did not inform the borrower of the right to internal review.

The survey also looked at employment trends and found that 18pc of companies surveyed indicated they had decreased employee numbers in the period, a fall of 2pc from the previous survey.

It also found that 73pc of enterprises reported they had made a profit or achieved a break even position in the six months to September 2012.

77pc of SMEs were aware of the existence of the Credit Review Office, while 65pc were aware of the Code of Conduct for Business Lending to SMEs.

Welcoming the report for the further clarity it brings to the pattern of credit demand by the important SME sector, the Minister for Finance, Michael Noonan said: "This comprehensive survey is the third in the series of SME Credit Demand Surveys and provides valuable evidence on the state of play in the SME sector in Ireland over the past 18 months. I would like to thank all of the SME's who have participated in the survey as it is a vital resource to all stakeholders in the sector. "