THE CENTRAL BANK should independently investigate how many loan applications by SMEs are refused by Irish banks, the Oireachtas jobs committee has said.
In its report on access to finance for the SME sector published today, the Committee said that it is “concerned” by divergent opinions on the availability of credit between banks and small business people on the ground.
Borrowers have alleged that banks massage approval figures by including approvals that contain unrealistic conditions, and excluding what they term ‘constructive rejections’, where a lender discourages an SME owner from making an application in the first place.
Banks, on the other hand, claim that their approval rates are high and, in many instances, climbing.
The Committee wants the Central Bank to step in and conduct “an independent verification of lending rates across the banking sector”, as well as consider redrawing the criteria for what exactly constitutes a successful application.
Welcome
The Small Firms Association welcomed the report, saying that it is critical that the recommendations are now implemented.
SFA director Patricia Callan said:
“For Irish SMEs, supply of finance is second only to finding more customers as the most pressing issue we are facing. It is critical that the practical recommendations contained in this report are accepted and acted upon immediately. They have the potential to make a real difference to improving SME financing.”
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