Minister Donohoe welcomes latest result of SME Credit Demand Survey

6th March, 2018

Survey shows demand for credit is low and that the number of SME businesses reporting a profit has increased for the sixth year in a row

The Department of Finance has today published the latest in its series on SME Credit Demand Surveys which covers the six month period April to October 2017.  This survey series, currently being conducted by Fitzpatrick Associates, together with Behaviour and Attitudes, on behalf of the Department of Finance, is the most comprehensive survey of SME Credit Demand in Ireland, covering over 1,500 respondents through an in-depth discussion.  The survey covers all the various sizes of SMEs be they micro enterprises, small-sized enterprises or medium-sized enterprises.


Some of the key findings of the survey include:

  • Favourable trading conditions remain for SMEs with 86% of SMEs reporting a stable/increased trading performance and 59% of SMEs reporting a profit over the six months from April to October 2017.
  • During the period of this survey (April to October 2017) some 23% of SMEs requested credit and within that 85% of completed credit applications were approved or partially approved.
  • Of those who did not request credit, 88% of SMEs stated that they did not seek credit because they did not need it.
  • The most significant increase in the type of credit requested by SMEs is for new loans (up from 28% in 2016 to 34% in 2017
  • Business sentiment with regard to the next six months remains in positive territory and confidence has increased from 48% of SMEs in Sept. ’16 (expecting the business climate to improve in the next six months) to 57% in Sept. ’17 This is a welcome improvement given uncertainty cause by Brexit.


On publishing the results of this most recent survey, the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D. stated: ‘The results of this latest SME Credit Demand Survey show that demand for credit continues to remain low across SMEs of all sizes.  However, encouragingly, the number of businesses reporting a profit has continued to increase and this optimistic business performance can impact positively on credit demand as companies look towards expanding or consolidating their business’.

“I would like to express my sincere thanks to each and every one of the SMEs who took the time to participate in the survey.  The information gathered allows us to update our understanding of the SME credit and lending landscape and is truly an invaluable resource that allows us to develop, refine and implement policy measures to support our indigenous businesses.

“As evidenced in the Programme for a Partnership Government, we remain committed to ensuring that all viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy.”



Notes for editors:

Background to the series of SME Credit Demand Surveys

Bank of Ireland and AIB agreed in July 2011 to fund an independent review on credit demand by SMEs, which was commissioned by the Department of Finance following a public tender competition. The first twelve reviews covered the period April 2011 – March 2017. The review published today covers the period April to October 2017.

The review, carried out by Fitzpatrick Associates, together with Behaviour and Attitudes, examined the demand for credit through a telephone survey covering over 1,500 businesses. The survey was of high quality, drew a carefully constructed sample from a large database of SMEs, made repeated calls to ensure a full response and asked factual questions. The full questionnaire is included in the report. The report and previous reports are available on the Department of Finance website at


Key Findings of the Report:

Demand for credit


  • 23% of SMEs requested credit (Sep 16: 23%). This stability in credit demand is consistent across SMEs of all sizes.


  • The main stated reasons for not having sought credit in the past six months are dominated by a simple lack of credit requirements, a reason cited by 88% of businesses not seeking credit.


  • The most significant increase in credit demand is from the hotel and restaurant sector (from 33% in September 2016 to 39% in September 2017), with the greatest decline being in construction (from 30% in September to 25% in September 2017).



Decisions on credit


  • 85% of credit applications (excluding pending) were approved or partially approved (+1% from Sept. ’16).
  • 57% of respondents believe that the banks are lending to SMEs (+7% from Sept. 16).
  • Decline rates are highest amongst micro companies, and are higher for export than for non-export businesses.
  • Main stated reason for credit decline remain centred on applicant controlled factors, particularly account performance/history. 20% of all companies who have been declined bank finance agree with the reasons for their refusal, an increase for a corresponding figure of 9% in September 2016.


  • 60% of SMEs whose credit application were approved have availed of all of the facility, a further 15% have availed of part of it, with one in four not yet having availed of it.


Reasons for not requesting credit


  • 88% of SMEs stated that they did not seek credit because they did not need it (Sep 16: 86%).
  • Only 1% of SMEs report that they did not request credit because they felt it was too expensive to borrow.
  • Additionally, only 1% of SMEs indicated the reason for not seeking credit was due to it not being the right time given the economic conditions.
  • 2% have not applied for credit due to fear of possible rejection (Sep 16: 1%) while 1% have not applied as they believe the banks are not lending (Sep 16: 1%).




  • In 49% (Sep 16: 47%) of cases where applications were declined, the SME said that the bank informed the borrower of the right to an internal review.



 Awareness of Credit Review Office


  • Excluding ‘don’t knows’, the proportion of companies refused credit from the main banks who said that they were informed of their right to a decision review by the Credit Review Office stands at 64%. (It should be noted that this question was changed in this wave to include customers of both Ulster Bank and ptsb).
  • 50% of respondents are aware of the Credit Review Office (this question has changed in this wave).



 Awareness of Government Support Initiatives


  • Looking at State funded support, awareness is highest for Enterprise Ireland (87%, up 1% from Sept. 2016) followed by Local Enterprise Offices (74%, up 7%).


  • 49% of SMEs are aware of the Credit Guarantee Scheme (Sep 16: 40%) while 39% are aware of Microfinance Ireland/Microfinance Loan Fund (Sep 16: 32%). Awareness of the Supporting SMEs Online Tool is 31% (Sep 16: 29%) decreased.   


  • Awareness of the Strategic Banking Cooperation of Ireland (SBCI) stands at 29% (significantly higher than the 21% in Sep 16).