Access to credit remains a major issue for firms, however…
The Irish Small and Medium Enterprises Association (ISME) has welcomed a decrease in loan refusals, as its Quarterly Bank Watch survey shows an improvement in loan approval rates for SMEs.
The survey, which covered the period between March and May this year, found that 35% of firms applying for funding were refused credit, down from 43% in the previous quarter.
Over a quarter of initial bank decisions were made within one week, down from 33% in the previous quarter.
Demand for bank credit remains steady.
ISME also noted that bank charges are a concern for firms, and that delays in decision times had to be addressed.
Whilst it felt the decrease in refusals is a step in the right direction, ISME says refusal rates are still too high and progress is need.
ISME chief Mark Fielding commented:
"The national figures clearly demonstrate that all three rescued banks are chasing Prudential Liquidity through reduction of the quantity of loans on their balance sheets through a reduction in SME lending.
"Banks are still not lending to the level appropriate to an economy 'in recovery'. The statistics from our own Central Bank, the ECB and numerous economists, demonstrate the dearth of appropriate credit. We must put an end to the fiction that bailed out Irish banks are functioning properly.
"Despite assertions from the banking PR machine, access to credit is patchy and the application process is getting more torturous, with 21% of applications are still pending at end of May.
"There seems to be a difference of approach in different parts of government. We have one department concentrating on preparing and fattening up one bank for sale and downplaying, if not ignoring any negative signs.
On the other hand other ministers acknowledge that there is still market failure in SME banking. Meanwhile small and medium business struggle for finance facilities against the tide of ignorance at branch level of alternative sources of finance."