Low-rate credit from German Bank will benefit SMEs.
Irish banks cannot be trusted to manage this funding.
Creation of a Strategic Development Fund vital for the success of this initiative.
ISME, the Irish Small & Medium Enterprises Association, welcomed the plans to provide access to low-rate funding through the German development bank, KFW, which will be highly beneficial for Irish SMEs who are currently finding it difficult to access credit. However, the Association warned that the funding must be provided through the NTMA or an alternative strategic development fund, as our bailed-out banks cannot be trusted to manage and pass the interest rate savings on to businesses.
According to ISME CEO, Mark Fielding, “Irish SMEs are currently paying extortionate interest rates to our uncompetitive banks. Recent research has shown that Irish businesses are paying up to three times as much as their German counterparts for credit. This proposal, if managed appropriately, will help Irish SME owner-managers to grow their businesses as we continue to move out of recession.”
“This initiative will only be effective if the cheaper interest rates are fully passed on to the appropriate businesses. It is clear from the dubious record of Irish banks that they can never be trusted to pass cheaper lending rates on. They would undoubtedly exploit this opportunity to pile on exorbitant fees and charges and thus destroy the potential benefits of this plan. This funding must be managed through the NTMA, or a new Development Fund to provide much needed competition.”
“Access to credit is an issue that has been plaguing Irish SMEs since the beginning of the recession. The latest ISME Quarterly Bank Watch Survey shows that bank credit refusal is now at 57%. Overdrafts had also been reduced for 31% of respondents during Q3’13. Clearly, lower interest rates and improved credit access will be a major boost to indigenous SMEs. This is why it is so important that the loans be provided through a trustworthy source, something our banks could never be,” concluded Fielding.