Most Irish SMEs rely on traditional forms of finance to grow their business despite a large increase in the availability of alternative sources of capital for SMEs at all stages of their development
This is according to a new research report, “Equity Finance – The Irish Equity Challenge” published today.
The research, carried out by Ipsos MRBI for AIB, finds that 71% of those surveyed said they were partly financed by the reinvestment of profits from the business, while 56% also relied on traditional bank debt in the form of a business loan or overdraft.
The majority of SMEs surveyed are forecasting growth, however, 20% reported that future access to finance was a factor in limiting the potential of their growth, while 24% of respondents cited economic factors as a potentially limiting factor. Just 1% of the SMEs surveyed secured investment from either a venture capital firm or an equity firm to help them grow and expand.
Of the 70% of companies that had no wish to use equity finance, 77% cited the possible loss of control of their business as a deterrent, while 69% said that they preferred debt finance.
Furthermore, six out of ten (61%) believed they would have to sell some or all of the business in order to pay back the equity investor while 60% believed that maintaining ownership was more important than achieving growth.
Speaking ahead of the launch of the report, AIB’s Head of Business Banking, Catherine Moroney said, "AIB wants to raise awareness among business owners about the supply of finance for growth - whether equity, mezzanine finance or senior debt - not just from AIB but also the Government supply of funding for example through SBCI, Microfinance Ireland and Enterprise Ireland. Making that ecosystem accessible and easy to understand is vital."
Source: www.businessworld.ie
