ISME, the Irish SME Association today released its quarterly Bank Watch survey for the second quarter of 2018. The survey was conducted in the second week of June, covering the three months of March, April and May. There were 504 SME owner manager respondents.
The results show a significant increase in refusal rates, increasing from 24% to 36%. Demand for credit remains on par with the first quarter of 2018 at 31%. Waiting time from decision to drawdown increased from 6 to 8 weeks.
The Association has voiced its concern at the high refusal rates, the length of time its taking for SMEs to access finance, and calls for banks to promote the SBCI funds.
Fifty four perecent stated that banks are making it more difficult to access finance and 4% of businesses have had their debt sold by their lender. The report shows that 67% states that the Government is having either a negative or no impact on SME lending, an increase from 55% on the previous quarter.
Speaking today, ISME CEO, Neil McDonnell said, "Today’s Results are unsatisfactory; to see an increase of 12% in refusal rates is disappointing after consecutive decreases. Without sufficient access to finance many SMEs will struggle. One member has reported to us that their bank (apillar bank) has sold their overdraft to a vulture fund. This is a first. We understand that our banks are still repairing their balance sheets, but they must consider the viability of their customers as they do so."
He added, "It's unacceptable to have businesses waiting on average 8 weeks from decision to drawdown. This type of delay is starving already cash-strapped SMEs. On top of the delays and refusal rates, Irish SMEs are paying more interest on their loans.It costs on average 5% for an Irish SME to borrow €250,000 from a bank,compared with only 3.3% across most of Europe."