Two thirds of Irish SMEs struggle to access credit
Almost two thirds (63 per cent) of small- and medium-sized enterprises (SMEs) in Ireland are finding it difficult to access credit, according to new research from the country’s largest peer-to-peer lender.
Linked Finance has highlighted access to finance as a key issue for Irish SMEs given the planned exit of two major banking bodies – Ulster Bank and KBC.
22 per cent of SMEs said that in light of these departures, they expect it to become “very difficult” to borrow money in 2022, while 41 per cent said they believe it will be “somewhat difficult”.
This comes after Ireland’s department of finance published research showing that there is subdued demand for mainstream credit options in the country. Just 17 per cent of Irish SMEs applied for bank credit in 2021, down by one per cent year-on-year, and by three per cent when compared to 2019 figures.
Read more: Irish P2Ps welcome new crowdfunding regulations
“Access to credit is the lifeblood of any fast-growing SME and the latest index findings indicate that many businesses are facing challenges borrowing money,” said Niall O’Grady, chief executive of Linked Finance.
“That’s come as the traditional banking sector is shrinking with the planned departure of Ulster Bank and KBC from the market.
“Our aim at Linked Finance is to break down barriers to growth by offering easy to access financing options with fast credit decisions and fast drawdowns.”
O’Grady noted that there is a clear opportunity for alternative lenders to take a larger role.
“We welcome the greater recognition from government that of the important role of alternative lenders, who help to maintain competition in the SME lending market,” he said.
Read more: Initiative Ireland promotes its chief operating officer to the board
“The Central Bank of Ireland’s recent announcement of plans to introduce a regulatory framework for P2P lending is positive as it will provide long overdue reassurance for lenders and borrowers.”
The quarterly Linked Finance SME Confidence Index also found that business optimism was starting to return to pre-pandemic levels, despite ongoing operational issues such as the impact of inflation.
The latest index showed business optimism at a level of 67.9 (out of 100), up from 49.5 a year ago. 48 per cent of all SMEs said that they expect business to be better in the coming quarter.
Read more: Linked Finance launches open banking solution for borrowers