Survey shows resilient SME sector despite uncertainties ahead – Donohoe

10th March, 2020

The Minister for Finance has today (Tuesday) published the latest in his Department’s series on SME Credit Demand Surveys which covers the six month period April 2019 – September 2019.

While the survey is conducted biannually, for presentation purposes, the report uses year-on-year comparisons. 

Key results include:

  • Demand for credit has remained stable at 20%.
  • Trading conditions remain positive, however there has been a decline in the number of companies reporting making a profit, with a net profit versus loss balance of +60% (-5%, Sept ’18) (During this period 69% of companies made a profit versus 9% who made a loss = balance +60%)
  • 80% (-6%, Sept ’18) of SMEs reported increased or stable turnover in the 6 months to Sept ‘19.
  • The average cost of credit reported on outstanding loans was 5.1%, up from 4.4% in Sept 2018.
  • 77% (-2%, Sept ’18) of SMEs applied for finance with one of the pillar banks, with the proportion of credit applications declined standing at 14% (+1%, Sept ‘18).
  • 79% of SMEs cited lack of credit requirements as the main reason for not having sought credit
  • 86% of SMEs said internal/retained earnings were their main source of working capital.

On the publication of the SME Credit Demand Survey Minister for Finance, Paschal Donohoe T.D. said: 

“I welcome the results of the latest SME Credit Demand Survey, April– September 2019, which show a resilient SME sector despite uncertainties during the period in question.

I would like to take this opportunity to sincerely thank all those SMEs that took part in this survey.  The SME Credit Demand Survey series allows us to gain vital understanding of the Irish SME landscape and is an invaluable resource that allows us to develop, refine and implement policy measures to support our indigenous businesses.”

This survey series was conducted by Fitzpatrick Associates in conjunction with Behaviour and Attitudes, on behalf of the Department of Finance.  It is the most comprehensive survey of SME Credit Demand in Ireland, covering over 1,500 respondents through in-depth discussions.  The survey ensures that it captures a full picture of the SME landscape in Ireland, with micro enterprises, small-sized enterprises and medium-sized enterprises accurately represented as per the percentage make-up of SMEs in Ireland.


Note for Editors:

Background of Report

The SME Credit Demand Survey has been conducted biannually since 2011 to monitor trends in access to credit by SMEs.  Please note while the survey is conducted on a 6 monthly basis, for presentation purposes, the report uses year-on-year comparisons.

The Department has conducted the SME Credit Demand Survey in order to have an independent and statistically significant report into the Irish SME landscape and the availability of, and demand for, credit that exists for SMEs.   The survey was conducted through a telephone survey covering over 1,500 businesses.  It 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

The report published today presents the results from the SME Credit Demand Survey April – September 2019.  Conducted by Fitzpatrick Associates in conjunction with Behaviour and Attitudes, all interviews took place between 10th October and 19th November 2019.

Summary and key findings

The following is the summary of results from the SME Credit Demand Survey. All interviews were conducted between 10th October and 19th November 2019 and covered the period from April to September 2019. Throughout the report, the most recent wave of findings (referred to as September 2019) is compared with corresponding waves from previous years. This ensures that historical comparisons are being made on a like-for-like basis, taking any seasonal issues into account.

Trading Performance

Trading conditions for this most recent period remain positive, albeit with the lowest levels of increased turnover since 2013. 

 In terms of turnover, 80% of all businesses surveyed reported increased or stable turnover in the past six months, compared to 86% in 2018.

The business services and manufacturing sectors reported the most pronounced levels of increased turnover, while the greatest declines in turnover were amongst the hotels/restaurants and wholesale sectors. 

The proportion of companies increasing their staff numbers stood at 25% in this most recent wave of interviewing, compared with just 8% of companies that decreased their head count. The net reported increase/decrease figure of +17%, therefore, represents no real change from the +18% registered in September 2018.

For the first time in eight years, the survey has seen a decline in the reported number of companies making a profit, with a net profit versus loss balance of +60% in September 2019 compared to +65% in September 2018.

Demand for Banking Finance

Credit demand from banks has remained static year-on-year, with 20% having applied for bank finance in the six months to September 2019 – the same level as in September 2018.

The survey also registered little change in expected future demand for credit, with 18% of SMEs expecting to apply for finance in the next six months, compared to 19% during the corresponding period in 2018. 

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 79% of businesses not seeking credit. 

Of the minority of companies which had requested bank finance in the six months to September 2019, new loans, leasing or hire purchase, renewal/restructuring of existing overdrafts, new overdrafts and renewal/restructuring of existing loans were the main bank finance products requested.

The only real decrease in credit demand, by sector, was found in the hotels and restaurants sector (down from 28% in September 2018 to 22% in September 2019).

Further analysis also indicates that a positive business performance in terms of turnover can impact positively on credit demand, as companies look towards expanding or consolidating their business. In terms of profitability, however, credit demand is currently highest amongst companies making a loss.

About 40% of all SMEs with outstanding debt were not certain of the interest rate attached to their outstanding loans. Of those that were aware, the average cost of credit reported on outstanding loans was 5.1%, up from 4.4% in September 2018.

About 16% of respondents reported that the number of days taken to receive payments from customers had increased over the past six months, a percentage which increased marginally from 14% in September 2018. 

Just 1% of SMEs reported having missed repayments of their loans in the past six months. It should be noted, however, that the wording was expanded in 2017 to ask the question of those with bank loans, other business loans, personal loans which use the business as collateral and other personal loans such as mortgages or buy-to-let loans.

Just 3% of respondents adjusted their bank debt in the past six months, with the main types of adjustments made being repayment scheduling and term extension. 

The Application Process

As noted, one-fifth of all SMEs have requested bank finance in the past six months – identical to the 20% in the same period last year.

Of those companies that have requested bank finance, working capital, investment in machinery or equipment, and growth and expansion requirements are the main uses to which this finance was put.

Of those firms that sought banking finance, 76% formally applied for it – down from 85% in September 2018. The main reason given for submitting an informal request is that the business felt there was no need for a formal request, as it related to a repeat loan or was linked to a personal relationship in the bank.

The proportion of companies that applied for finance with one of the pillar banks has slipped slightly – from 79% of all those requesting bank finance in September 2018 to 77% in September 2019. The average value of credit applied for was €265,686, up from €227,793 in September 2018. Of those applying for bank finance, 42% had to provide some type of collateral, with the main collateral type required being buildings, personal assets of the owners and accounts receivable. The average value of collateral required as a percentage of loan was 68% – higher than the corresponding 61% registered in September 2018.  

Some 67% of all finance applications were processed within the stipulated 15 working days of receipt of all information from the company, higher than the 64% reported over the same period in 2018.

The average amount of time from application to decision remained similar to September 2018, at 22 working days. The proportion of loans that are still pending has meanwhile decreased, from 12% to 5%. 

The proportion of credit applications that were declined stood at 14% in this survey, up marginally from 13% in September 2018. Overall, 81% of all SME credit applications were fully or partially approved at the time of surveying. Decline rates were highest amongst micro companies, and are broadly similar for export versus non-export businesses.

Those applying for credit as a result of Brexit, to manage payments to Revenue or because of a slow-down in debtor collection were more likely to have their request declined. The main stated reason for credit declines was a failure to meet the bank’s lending criteria.

In September 2019, 53% of companies that were refused credit reported that they were informed of their right to an internal review (based on a small sample size of 47 respondents), this figure stood at 38% in September 2018, down from 49% in September 2017.

Excluding ‘don’t knows’, the proportion of companies that were refused credit from the main banks, and said that they were informed of their right to a decision review by the Credit Review Office, stands at 67%, up from 60% in September 2018. 

Some 59% of SMEs whose credit applications were approved have availed of all the facility, a further 17% have availed of part of it, with 24% not yet availing of it.

Non-Bank Finance

The proportion of companies making enquiries for non-bank finance began to decline in September 2013 and has now levelled off at just 7% of SMEs in September 2019, no change from the figures reported in 2017 and 2018. A range of different types of non-bank finance were requested including Government support and loans from family, friends or colleagues etc.

About 67% of these requests for non-bank finance in September 2019 were either fully or partially successful, an increase from 62% in September 2018.   The decline rates for such requests were 18%, a figure which is up from 7% in September 2018. 

 Of those companies that have not applied for Government financial support, the main reason given was a lack of need for such finance (70%), while only 5% said they had a lack of awareness of such sources of funding.

A majority of SMEs surveyed were aware of Enterprise Ireland support initiatives (90%) and Local Enterprise Office support initiatives (79%). About 47% of SMEs were aware of the Credit Guarantee Scheme. About 86% of those surveyed also indicated that internal funds/retained earnings represented their primary source of working capital finance (an increase of one percentage point since 2018).