Dept of finance, SME credit demand survey

Published by: Jimmy Larsen

2014.11.26

The independent survey on demand for bank credit by SMEs in Ireland was published this month covering the period April to September 2014. This survey was conducted by RED C and was the seventh wave of this survey, each covering six month periods.

This survey is the most comprehensive survey of SME Credit Demand in Ireland covering over 1,500 respondents and over 6,000 direct calls to SMEs.

The overview of findings are shown below, with the full report available for download.

“The results from this period’s Credit Demand Survey mark another six months of significantly improving trading conditions among Irish SMEs. The great majority (84%) of SME now report stable or improving trading conditions. As a result the majority of SMEs report that they are either breaking even and or making profits. In turn this has led to a further overall stabilisation and increase in staffing levels.

At this stage of the cycle it appears that in general SMEs are using their improved and more stable financial position to re-invest in infrastructure that may not have been updated for 5-7 years during the recession, and as such are aiming to secure the business foundations before considering growth opportunities. With the need for finance to support working capital in decline, and as yet only a limited increase in demand for growth, overall we see a decrease in credit demand.

The lending picture of the banks to those still applying for credit is also very positive, with significantly higher approval rates (86%) across all company sizes. There is however some evidence those applications for growth are slightly more likely to be declined by the banks, and this needs to be addressed in order to encourage the desire for growth across the SME sector.

Less than a quarter (23%) of all SMEs now believe that banks are not lending, but at the same time the majority either state they believe banks are lending to a small number of SMEs or that they don’t know. The new trading conditions suggest that banks may need to do more to encourage credit demand for growth purposes, and the new Strategic Banking Corporation of Ireland will assist in this regard.

However, while many SMEs are not currently focused on where they can obtain credit support, further communication of Government supports is necessary in order to boost potential for growth.”

The full report is available for download here:
Dept of Finance SME Credit Demand Survey Report – Apr-Sep 2014

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