The Minister for Finance today published some of
the suggestions sent in by members of the public in response to his call for
suggestions on how to improve the number of Irish Small and Medium Sized
Enterprises (SMEs) applying for credit.
The suggestions published were selected on the basis of being the most frequently made suggestions, appearing to be the most relevant to the issue of getting viable businesses to seek credit and those that were considered the most significant.
A total of over 100 suggestions were received and the Minister thanked everyone who put forward suggestions: “I would like to thank all those who took the time to make suggestions on how to get viable businesses seeking credit.
The level and quality of the responses within such a short time frame showed how important this initiative is to Irish businesses. My Department now has a list of suggestions that we can work with to encourage SMEs to apply for credit,” Minister Noonan said.
The Minister took an opportunity to invite the
public to comment on the published list with a view to improving and
refining them. He stressed that his Department will be working on the
assessment of the suggestions at the same time.
Any comments should be sent to the firstname.lastname@example.org mailbox before 31 July.
A limited number of these suggestions have been selected for further investigation, development and implementation. These were selected on the basis of either being the most frequently made suggestions, appearing to be the most relevant to the issue of getting viable businesses to seek credit and the suggestions which the stakeholders considered most significant.
There may be regulatory or other reasons why these cannot be implemented which have not been examined yet.
1. “MABS” type of organization should be available to businesses. It could be populated by professionals (accountants, solicitors) currently out of work and some experts from major accountancy bodies.
2. Design and implement a web site which would provide advice on the preparation of cash flow projections.
3. Develop a comprehensive ‘Back to Basics’ Programme of business education and training across Ireland that each of the four Key Players (banks, Government, businesses and business advisors/accountants) commits to fully introduce to their own constituent members, with the result that there will be a significant improvement in the likelihood of viable businesses getting the support that they need and deserve.
4. There is a need to clarify what is meant by a viable business. Banks are saying that businesses are not viable when they would be viable if they could get credit.
5. Set up another office similar to the Credit Review Office. Market its role as a Commercial Credit Intermediary who would put together a credit application on behalf of a business free of charge. Provide assurances of client confidentiality and second a number of experienced commercial bankers from all the banks to it.
6. Approaches to the banks at the moment are fraught with difficulty, not least because there are no clear guidelines on whether finance is actually available, no clear guideline on what criteria banks are applying in their assessments of applications, no clear guidelines on what type of funding applications will be considered eligible for funding (e.g. cars, specialist equipment) and no clearly defined criteria for the applications. And most companies are reluctant to apply and risk a refusal of credit on their records – this reluctance might be overcome if they had a clearer idea on eligibility and availability.
Building trust and approachability
Ease and consistency of applications
Cost and Conditions of credit
Consequences of refusal of application
1. If an underwriter refuses a loan to a business it makes it much more difficult to get approved for credit in the future as there is a “negative mark” against the applicant. The underwriter should be obliged to outline the reasons why they decided to refuse the application, thereby making it easier for the business to address the problems outlined and re-apply for another loan. There should be no “negative mark” against a business if it reapplies for credit.
The stakeholders group consisted of
Allied Irish Bank
Bank of Ireland
City and County Enterprise Boards
Credit Review Office
Department of Finance
Department of Jobs, Enterprise and Innovation
Small Firms Association
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