The Central Bank of Ireland has today published its SME Market Report for 2019. The SME Market Report aims to provide a timely monitor of developments in the provision of credit to Irish Small and Medium Enterprises (SMEs) by financial intermediaries.
The report finds that gross new lending to SMEs declined 1.7% in the year to 2018 fourth quarter, driven by ‘Manufacturing’, ‘Wholesale, Retail, Trade and Repairs’ and ‘Primary Industries’, with increases elsewhere.
Credit demand remains low compared to previous years with 20% of SMEs applying for credit in the period April - September 2018. A large majority of micro, small and medium firms finance investment from internal funds.
Market share among the top three banks is high at 90.3% of new SME lending and concentration in the flow of new lending has stabilised since the second quarter 2016.
Working capital remains the most common reason for credit applications among micro and small firms, whereas credit for growth & expansion is more common among medium firms. Irish SMEs are more reliant on leasing and hire purchase for investment activities than the EU average but are less reliant on bank loans.
The report found that rejection rates on bank finance applications have tended to stabilise recently.