Graham Byrne, Director of Bibby Financial Services, comments on the independent report commissioned by the Department of Finance on the demand for credit by SMEs published today.
“On a positive note the findings indicate a more optimistic and arguably improved picture of lending practices amongst traditional lenders. However, the 70% figure for approved requests for credit doesn’t reflect the reality of what SMEs seeking credit have to overcome to secure such funding.
With 78% of firms who were refused credit saying they did not agree with the reason provided by the bank for the refusal, it is clear that SMEs require flexible funding without having to deal with bureaucratic delays or decisions made on past history, unfair and circumstantial in many cases and even irrelevant for start-up businesses.
“Furthermore, the report shows that 26% of businesses have reported an increase in turnover in the last year and our own statistics agree with this – our clients’ turnover is collectively up over 27%, indicating that if a business has the correct level of funding, they can still prosper in these very difficult times.”
“Business owners must be encouraged to look at the alternative options when availing of credit which can offer real flexibility to suit their business operations. Irish SMEs no longer are restricted to relying on traditional lending institutions. The report highlights the demand for funding for cash flow and working capital purposes however, SMEs have options open to them to not only ease cash flow problems but to address them head on.
“Such options include invoice finance which offers flexible funding and can also help businesses chase payment on their behalf easing cash flow problems in the process.
“We have a €50m fund in place specifically for SMEs and start-up businesses. We would encourage business leaders and the Government to help bring about awareness of the full options open to business owners who are of the belief that they have to rely on traditional financial institutions offering tough and inflexible terms for lending.”
Posted on 29 November 2011