Belfast Telegraph

'Make SMEs data lending available'

By Margaret Canning

Data should be consistently available on the amount of bank lending to Northern Ireland's small to medium enterprises (SMEs), an all-Ireland report on access to finance has said.

InterTradeIreland's research said the data was needed so that any gaps in funding provision could be addressed.

But the report, Access to Finance for Growth for SMEs on the island of Ireland, does reveal that there was £4.7bn in banking funding to SMEs in Northern Ireland in 2012, compared to £20.9bn in the Republic.

The cross-border trade body said: "The absence of regularly reported figures for Northern Ireland represents a significant gap in the analysis of total funding available... and hampers the development of policy responses to funding gaps that might exist in that market."

Economist John Simpson said he agreed data on the province's bank lending should be collected.

"This report further develops an issue which has become more controversial in recent years, and certainly it shows a lack of clarity as to who does what," he said.

"In Northern Ireland, we fall between the Bank of England and the local Executive ministers. The problem is that we have seen the banks play one off against the other."

Bank lending in the form of overdrafts and loans was the dominant form of finance and accounted for 94% of lending across Ireland – ahead of other businesses around Europe. However, InterTrade said the reliance on banks was "disproportionate".

Firms were also more reliant than elsewhere in Europe on short-term funding, like overdrafts, which were not the best way to finance growth, the report said.

The report claimed that most formal loan applications from SMEs were approved, even though the businesses themselves had formed the view that banks weren't lending. However, the length of time to respond to applications – some times 21 days or more – caused concern among 300,000 SMEs.

But it did recommend the use of a mediator to help make applications, a system which had been successfully adopted in France.

Equity finance had become the second most important source of funding, whether seed capital, venture capital and angel finance.

Belfast Telegraph