SME reports €8.6bn in loans are in arrears over 90 days

The Central Bank has published an SME Market Report compiled by economists in the Financial Stability Division. This report gives an up-to-date picture of developments in the Irish SME credit market, it provides information on credit demand, credit access, loan terms and conditions, loan default, interest rates and credit market concentration.

The report shows up to €8.6 billion in loans held by the covered banks to small and medium businesses are in arrears over 90 days. At the end of 2013, the average SME owed its bank €71,101 and was paying interest at 6.41 per cent. The numbers show that just over 26 per cent of all loans to the sector were in default, meaning that repayments on these debts were 90 days or more overdue.

The highest default rates are found among construction companies, hotels, restaurants, and SMEs with exposure to the domestic economy. The SME sector has been flagged as a huge problem for the Government. Last month the Government announced the creation of the Strategic Banking Corporation of Ireland, which has funds of €500 million, and which lend money to a SMEs through resident lending institutions.

Gross new lending to SMEs has remained static at €350m to €750m over the period between 2010 and the end of last year. The number of SMEs applying for credit has decreased from 40% to 35% between 2011 and 2014.

View Full Report SME Market Report: H1 2014