52% of SMEs refused credit by banks
ISME is calling on government to 'demand honest and reliable reporting from the rescued banks' and increase finance availability for SMEs
3 June 2014
The results of the latest Quarterly Bank Watch Survey released today by ISME, the Irish Small & Medium Enterprises Association, show a reduction in demand for bank credit and a continuing high refusal rate in the three months to end of May.
The association called for a speeding up of legislation to start the Strategic Banking Corporation of Ireland (SBCI), for which the ISME has been lobbying since the bank crash of 2010.
Commenting on the survey results, ISME CEO, Mark Fielding, said: "The fact that 93% of SMEs disbelieve the banks and 71% believe that government has had a negative or neutral impact on SME lending, is an indication of the distrust of banks and the perception of the performance of the current administration in relation to this problem."
The survey conducted in the week ending 30 May, had 1,083 owner managers of SMEs respond, a rate of 12%. Results showed 52% of companies who applied for funding in the last three months were refused credit by their banks, a slight improvement on the 54% refusal rate, seen in the previous quarter. What’s more, 32% of respondents had requested additional or new bank facilities in the last three months, a reduction from 39% in the previous quarter and lowest demand since June 2011.
Just 20% of initial bank decisions were made within one week; a deterioration from the 23% in the previous quarter. On average, the decision time has increased to just over four weeks and the wait to drawdown has increased from three to five weeks.
ISME criticised "yellow pack relationship managers in banks" who are "scared to make a lending decision, for fear of career reprisal". The association said risk assessment should be outsourced to managers with the experience required.