Small Firms Association calls for creation of bank for entrepreneurs

The decision of lenders such as Danske Bank to pull the plug on their Irish operations will put further pressure on small businesses when it comes to accessing credit, Small Firms Association chairman AJ Noonan has warned.

Danske, which has 100,000 personal and 10,000 business customers, was the second bank in a week to announce plans to close after ACCBank had last weekend said it was handing back its banking licence and closing its remaining branches in Ireland.

Calling for the Government to establish a State bank to help small firms, Mr Noonan said one in four firms is still finding it challenging to access credit.

He questioned whether the troika's departure would lead to "parity of esteem" for entrepreneurs and small business in accessing finance and credit. "We now need to see the banks lending to more challenging but viable businesses to ensure they can access the credit they require for working capital and investment."

Troika departure
Mr Noonan said it was "imperative" the Government spell out exactly what the departure of the troika and regaining of our economic sovereignty means.

“Will it mean that our pension contributions will be safe from further levies and taxes?”

He added that AIB and Bank of Ireland claim they are lending, promoting "huge grant approval rates". "There are low drawdown rates though. The price of the loan is too high for the small firm to meet, or they would find it too hard to meet the terms and conditions. They thus don't draw down the loan."

He said the banks should re-examine their lending policies and why so many loans are approved but not drawn down.

Separately yesterday, Permanent TSB said it would increase the number of products and services it offers to banking customers in Ireland, following the moves by Danske and ACC.

PTSB said it intended to bring forward the introduction of a number of initiatives, including the provision of increased resources for small businesses.

Addressing the Small Firms Association annual lunch yesterday, Minister for Transport, Tourism and Sport Leo Varadkar said raising the credit review threshold and improvements to the R&D tax credit in the budget were good things for small businesses but not enough. "Businesses need more customers and more domestic demand. There is the possibility of further stimulus in a few months using the proceeds from the sale of Bord Gáis and the power plants."

He said Ireland has “very high marginal tax rates” which was affecting the retail market. “If we could provide a middle income tax cut in the next budget or the one after, that would stimulate domestic demand.”