Irelandís Businesses Suffer As Loan Refusals Climb

23 August 2012 14:00 - Mark Maffia

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Irelandís Businesses Suffer As Loan Refusals Climb

According to a new report by Irelandís central bank, Irish businesses face among the highest rejection rates for loans in Europe. The report highlights that a quarter of applications for loans or overdrafts by small and medium sized businesses are being refused. This is the second highest rejection rate behind Greece which has seen loan rejection rates soar to over 40% as the Eurozone crisis hit highs. The share of companies that did not apply for loans despite requiring credit is also at its highest in Greece and Ireland, where 21.2% and 14.8% of companies respectively did not apply for loans because of fear of rejection.

The report was an economic analysis by the Central Bank based on data compiled by the European Central Bank, European Commission and Department of Finance.

The report says, ďHigh rejection rates in Ireland cannot be explained by weak demand of the quality of the pool of potential borrowers in Ireland, thus suggesting that the high rejection rates observed in Ireland represent supply side constraints faced by Irish SMEs.Ē

The report concludes that despite a marginal improvement in loan rejection rates and credit conditions between September 2011 and March this year, immediate government action is necessary.  Action is particularly required as credit constrained firms are more likely to shed jobs, close down , spend less on technology and refrain from entering new markets.

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Related Links:
• Bank Ceannais na hEireann
Central Bank of Ireland
• Loans
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