The Small Firms Associaton (SFA) has welcomed last week’s publication of the Fifteenth Credit Review Office report, with SFA director, Patricia Callan calling it “a strong endorsement of the credit review system that Ulster Bank and PTSB have no voluntarily entered”.
However, the SFA adds that it wished to see more entrants to the small business finance space to help ensure choice and competition for firms seeking finance.
According to Callan; “The new SBCI loan fund should be used to attract new financial intermediaries into the market to provide lower cost, new and innovative products, such as longer-term loans and interest free holidays, which will meet a market need.”
A recently conducted poll of SFA members revealed that investing is the current priority for 35% of small businesses while paying off debts is a priority for 25%. Furthermore, 17% are focusing on saving, with 13% looking for new loans and 10% restructuring their borrowing.
Callan explained that small businesses want to be funded by those who understand their businesses and look to building a long-term relationship with them.
“If they have trust that this is available,” she said, “then demand for credit will increase and it is essential that the banks move their risk pendulum to assess the business owner and the business potential, rather than their traditional focus on asset-backed lending and security.”
“Even those businesses with legacy debt, if their business model is good, will want to expand in a growing economy and they must be allowed to do so. Only by backing small businesses, will the jobs and growth we so desire be delivered. An effective financial system is a fundamental part of this equation,” Callan concluded.
© 2015 - Checkout Magazine by Jenny Whelan.