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.”
Patricia Callan,
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
financing”.
Specifically, Callan welcomed the acknowledgement that “a greater diversity of
funding such as direct government funding and guarantees, enhanced competition
in the business banking market from credit unions and potentially the new SBCI,
peer-to-peer lending platforms, business angels and venture capital are
necessary.”
