ISME report proves Govt abandonment of SMEs

Fianna Fáil Spokesperson on Jobs Dara Calleary has said a new report showing more and
more small businesses are being turned down for credit is further proof of a
deepening credit crisis in this country.

The ISME figures show that 54% of credit requests from SMEs are being turned down by lenders.  That’s up 4% in just three months.   It comes after a Central Bank report published last week
revealed that lending to SMEs dropped by 6.2% last year.

“It is clear from these figures and from the recent Central Bank report that the economy is
being starved of credit,” said Deputy Calleary.

“This is further proof of a deepening credit crisis in this country.  Viable businesses are being refused credit by banks that are focused solely on preserving capital and minimising
risk.  They are being prevented from expanding and creating jobs in communities
across the country. The lack of support available to SMEs is forcing many to lay  off staff or close their doors entirely.

“The Government has completely washed its hands of the situation. It isn’t even subjecting the pillar banks to lending targets this year.  Even with lending targets last year, there was a
6.2% reduction in the availability of credit. Now that the Government has given
the pillar banks free reign, the situation is likely to get far worse this
year.

“This will seriously impede our economic recovery. The banks remain
totally focussed on their own balance sheets and are showing no intention of
improving their relationship with the SME sector.  With nearly 70% of workers in
the private sector currently employed by SMEs, the Government simply cannot
afford to take its eye of the ball.

“In his recent much reported comments, economist Morgan Kelly attacks the Government for its lack of policy on SMEs.  He says ‘the current government essentially boasts
about its lack of policy’ and is taking ‘purposelessness to a high art’.  It is
clear that the situation can no longer be ignored.

“This requires urgent Government intervention.  I am urging the
Finance Minister Michael Noonan and Jobs Minister Richard Bruton to ensure that
the State supported banks, which have a responsibility to the taxpayer, are
forced to start playing ball by supporting viable small businesses.”