The ISME Bank Watch survey results for Q3’18 show a small decrease in loan refusal rates, decreasing from 36% to 29%. Demand for credit has increased from 31% to 36% while waiting time from decision to draw down is on average 8 weeks. Without sufficient access to finance many businesses will struggle.
The sharp rise in businesses waiting more than 10 weeks from permission to drawdown in this quarter is a worrying trend. This type of delay is starving already cash-strapped SMEs. Notwithstanding the delays and refusal rates, Irish SMEs are paying more interest on their loans.
The main findings from the 598 respondents in the third week of September are as follows:
- 36% of respondents required additional or new bank facilities in the last 3 months, up 5% on Q2’18.
- 29% of companies who applied for funding in the last three months were refused credit by their banks, a decrease on the 36% in Q2’18.
- Awareness of the Credit Review Office remained unchanged at 68%. There was a nominal decrease in awareness of the Credit Guarantee Scheme from 67% to 66%, while awareness about the microfinance scheme rose from 52% to 57% in Q3’18.
- 19% of applications are awaiting a decision late-September, a decrease from 23% in the previous quarter.
- On average, businesses are waiting 5 weeks for an initial decision on loan applications. The wait time for drawdown was 3 weeks.
- 17% of initial bank decisions were made within the first week; a decrease from 28% on previous quarter. 17% are waiting 4 to 6 weeks, while 17% are waiting more than 10 weeks.
- 55% of those who required funding made a formal application, an increase from 47% in the previous three months, while informal applications decreased from 77% to 70%.
- Of the 60% approved for funding, (16% of whom were partially successful), 60% have drawn down finances either fully or in part.
- 50% of respondents had cause to be concerned about bank fees and charges.
- 63% state that the Government is having either a negative or no impact on SME lending.
- 10% report that their debt has been sold by their lender to another institution.
- 57% have been with their bank for 20+ years.