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SME Lending – And Application Wait Time – Up in Ireland

The rate of refusal of small business loans has gone down in Ireland in the most recent quarter, according to a new study, but the results come with a bit of bad news for SME borrowers.

The latest quarterly report by the Irish Small and Medium Enterprise Association.

But the increase in small business lending coincides with an increase in wait time experienced by businesses applying for a loan.

The ISME data revealed that 27 percent of loan applications were still pending in the last quarter, meaning business owners are waiting up to eight weeks before receiving an answer and receiving funding. These delays are reflected in the statistics, which found that in the most recent quarter, just 23 percent of bank SME loan decisions were made within a week, down from 30 percent the quarter before.

On average, decision times stood at more than four weeks. The wait for businesses able to drawdown loans also increased to an average of two weeks, up from three weeks in the quarter before.

Still, however, the report was largely positive, showing a steady, high demand among small businesses for financing. “Bank credit was largely unavailable to SMEs during the recession,” said ISME CEO Mark Fielding. “This made a difficult business environment even more perilous for small businesses. It seems that the improvements in the economy has inspired the banks to reopen their purses and move towards healthier lending policies.”

Additional findings of the ISME report for the most recent quarter revealed that of the 68 ISME member companies approved for a business loan, 48 have already at least partially drown down the finance. Nearly half (48 percent) of financing requests among SMEs were for term loans, but additional demands included factoring and invoice discounting.

Nearly one-third of ISME member firms said they plan to apply for a Strategic Banking Corporation of Ireland loan, and most of those companies said they plan to do so within the next six months. The SBCI is a government-backed business lending group that offers financing at up to 2 percent discounted rates than mainstream bank loans, reports say.

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