Celtic Tiger Growth Underpinned by SMEs – Now It's Time To Help Them Return
Commenting on the recent Government Independent Review of Credit Availability for Small and Medium Sized Enterprises (SMEs), Graham Byrne, Bibby Financial Services Ireland sales director, said: “While it’s good news that the Government has realised the importance of freeing-up credit for the SME sector, this report clearly highlights there is more to be done.
“Irish SMEs underpinned the growth of the ‘Celtic Tiger’ and it’s vital we continue to support them while Ireland, like the rest of the world, strives to navigate its way out of the recessionary maze.
“The good news is that the report shows there has been some improvement by the major lenders to assist the SME sector, however, anecdotally we know this continues to fall well short of the mark and more measures are needed to ensure SMEs have adequate finance to enable them to weather the current economic storm.
“We believe the Government needs to go further and build its recommendations into actions, following some of the steps taken by other European Governments, such as: a stricter enforcement of late payment legislation; setting up a taskforce to assist SMEs making funding applications; a viable and affordable credit insurance scheme; and the introduction of a government loan guarantee scheme for SMEs.
“With the report highlighting that refusals for new credit are predominately related to working capital requirements to address revenue cuts and a slow down in collecting outstanding payments from debtors, it’s clear there is a growing appetite for greater funding flexibility. Indeed, with Bibby’s own research** showing the recession has led 69 per cent of business owners to keep a closer eye on their finances, it’s important SMEs are aware of all the options available as the economic forecast improves.
“Alternative forms of funding outside of traditional overdraft facilities, such as invoice finance, can provide a vital and effective way of managing cash flow. Indeed, these alternative solutions continue to grow in popularity. Last year saw 52,000 businesses in Ireland and the UK *** use invoice finance and this looks set to grow throughout 2009 as increasing numbers of Irish businesses realise it’s an acceptable and credible form of business finance and one worth embracing.
“While, as the report shows, banks and other lenders’ credit lines are still fairly restricted, the doors of independent finance providers, such as Bibby Financial Services, remain very much open for business.”