Fine Gael TD John Paul Phelan is encouraging businesses in Kilkenny who have been refused credit from their banks to appeal the decision to the Credit Review Office, where 60% of cases reviewed are overturned.
Deputy Phelan was speaking following the publication of a study by the Central Bank of Ireland regarding loan applications and access to credit.
“The vital role SMEs (small and medium enterprises) play in our economy and their intrinsic importance in our recovery is well recognised by Government,” he said. With this in mind, lending targets of €3.5 billion have been set for both pillar banks, AIB and Bank of Ireland, for 2012, with targets of €4 billion being set for 2013. These targets are closely and continually monitored by the Credit Review Office on a quarterly basis.”
“Government, through the Economic Management Council, also meets regularly with the banks to ensure that targets are being met and that credit is being extended to those who need it. It must be remembered that while the onus is on the banks to meet the targets set, the costly lessons of the credit bubble, which encouraged people to look for credit that they neither want nor need, must be borne in mind,” he said. “It will, however, encourage those who have been refused access to credit to appeal the decision to the Credit Review Office who can review loan applications up to the value of €500,000, with 60% of loan refusals overturned.”
Deputy John McGuinness, Fianna Fáil’s spokesperson on small business, said that the figures showing that one in four businesses seeking a loan are being rejected is proof of the Government’s inability to get credit flowing throughout the economy.
“The figures ... confirm what small and medium businesses throughout the country already know – banks are still not lending. The situation has become so dire that companies are not even bothering to ask for finance because they know what the answer will be,” he said.
“The banks are failing the very people who own them and have provided the finance for them to exist. The finance that the Government provides to the banks should be withdrawn if they refuse to lend,” Deputy McGuinness said.
To address the matter, he proposed that greater lending powers be given to credit unions and the County Enterprise Boards. “The banking sector has a virtual monopoly on business lending at the moment and if there were a facility for small and medium-sized businesses to access smaller amounts of credit at CEBs or credit unions, this could provide a much needed boost to the sector,” he said.