Irish SME Finance: The Oireachtas Joint Committee on Jobs, Enterprise and Innovation in a report [pdf] published today says that in an effort to reduce Irish dependency on traditional banking as the overwhelmingly predominant source of funding for SMEs, the Committee considers it of paramount importance to increase the attractiveness of alternative sources of finance.
The Committe makes 25 recommendations and says that independent verification of lending rates across the banking sector is necessary. The Committee said considers that the Central Bank may be the appropriate authority to carry out such a study. Furthermore, the Committee is of the view that consideration should be given to the redrawing of the criteria for which a successful application is viewed.
The Committee considers that a viable business should not be brought down by the calling in of a previous bad loan and it urges the banks to consider the parking of debt in such instances and to follow the principles laid down in dealing with mortgage distress as a possible solution to dealing with business debt.
The Committee said it notes that the majority of funding provided through crowdfunding is between €100 and €200 with the average payment equalling €146. "In this vein, the Committee maintains that consideration should be given to lightening the tax burden on interest made on minor investments in crowdfunding. This could have the effect of increasing the attractiveness of crowdfunding as an alternative system of finance by giving people the opportunity to earn more for their money than would be the case by depositing it in the bank."
John Lyons TD Committee vice-chairman, said: “Given the importance of SMEs to economic growth and job creation and retention, the Joint Committee on Jobs, Enterprise and Innovation decided to examine the issue of access to finance for SMEs. Our Committee has identified the availability of funding and supports for small and medium sized businesses as a key priority in national efforts to achieve economic recovery. The small and medium sized enterprise sectors are integral and important elements of our economy and if we are serious about our indigenous businesses we need to encourage and help create the best environment for them to operate in. The availability of funding and supports are essential for many small businesses to get up and running, flourish, innovate and expand."
Speaking today, Peter O’Mahony, chief executive of Linked Finance said: “SMEs are a backbone of the economy and communities right across Ireland are working together to lend their local businesses important funds for growth rather than relying on traditional banking channels. They are doing this safely and securely on peer-to-peer lending platforms. These communities would welcome further support from Government, such as increasing the tax incentives for lending to SMEs, and such a move help SMEs be they butchers, bakers and candlestick makers, right across Ireland who are working hard to grow their business and increase employment.”
director of the Small Firms Association,
commented: “For Irish SMEs, supply of finance is second only to finding more
customers as the most pressing issue we are facing. It is critical that the
practical recommendations contained in this report are accepted and acted upon
immediately. They have the potential to make a real difference to improving SME
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