The level of lending to Small and Medium sized Enterprises (SMEs) has increased this year, according to a new study published today.

The SME Lending Study by accounting firm Mazars said total lending to SMEs increased by 2 per cent on the previous study.

However, demand for lending from SMEs still remains low, with just 38 per cent applying for loans in the six month period from October 2011 to March 2012.

Where credit is being sought, it is mainly for renewal/restructuring of existing facilities rather than for growth and expansion, the study found.

According to the study, 72 per cent of credit applications received were fully or partially approved. The total excludes companies whose applications are still awaiting a decision.

Pat Farrell, chief executive of the Irish Banking Federation said the real significance of the Mazars lending study lies in its confirming the importance of a number of key components to the bank/SME relationship.These are: business viability as a basis for securing credit, banks' responsiveness to the needs of viable businesses and reliable information as distinct from perception as a driver of policy and practice.

"In this regard, we strongly encourage SMEs to apply for credit where they believe they have a sound proposition," he said.