Lending crisis 'still threatens small business viability"

Last week"s ISME Bank Watch Survey confirmed that banks are continuing to restrict lending to the Irish SME sector, with the majority of companies (58 per cent) being refused credit facilities in the last quarter, according to the business lobby group. 'The results indicate that the situation is deteriorating and that the blame lies firmly with errant bankers and their selfish lending policies,' said ISME, demanding that the Government stop 'pussy-footing around with the banks and force them into freeing up badly-needed credit'. The results of the survey, which attracted over 400 responses, also showed that 62 per cent of companies found banks to be 'unhelpful" in their request for acquiring finance. Some 83 per cent of companies said the banks are making it more difficult for SMEs to access finance. ISME chief executive Mark Fielding said: 'Contrary to public statements issued by the banks, there is clear evidence that they are making it as difficult as possible for business customers to access badly needed credit, with serious ramifications for those concerned. The duplicity of the banks is self-evident and, if left unchallenged, will lead to a huge increase in company closures with thousands of additional job losses.' He added: 'Sound profitable businesses which require credit facilities are among the companies being refused. The result is that companies either have to put plans on hold or are faced with increased cashflow problems which, in many cases, is threatening the viability of the businesses concerned. 'Over the last number of months the main banks have introduced new lending schemes 'specifically targeted at SMEs". Ironically, with the securing of badly needed EIB funding, the situation for SMEs is worse than ever. It is obvious, therefore, that the banks" initiatives are nothing more than PR stunts in an effort to give the impression that they are open for business, whereas in fact, the opposite is the case,' continued Mr Fielding. He said the recapitalised banks immediately shoud provide lending facilities at affordable terms to hard-pressed but viable businesses. 'The banks can no longer ignore the greater good of the economy. The Government, who have bailed them out, must insist on the resumption of credit lines to small and medium businesses. 'The introduction of a Government guarantee scheme, similar to that introduced in the UK, would also help in the current crisis. Should the situation be allowed to continue, business activity will deteriorate, creating a vicious cycle of funding deficiencies leading to company closures and job losses,' he warned.