Half of all small companies are still being refused credit from their bank, a study found.

The Irish Small & Medium Enterprises Association (Isme) said demand for lending has increased in recent months, while 5 per cent of those quizzed are satisfied with Government intervention in SME lending.

Its quarterly bank watch survey found 50 per cent of companies who applied for funding in the last three months were refused credit by their banks, down from the 58 per cent in the previous quarter.

Mark Fielding, Isme chief executive, said: "As the Troika depart and evidence of tentative economic progress is appearing, the reasonable expectation is that the country will start to gain momentum.

“However, without reasonable and fair access to credit, SMEs will not be able to fulfil their role of driving growth.

“The results of this survey demonstrate, quite categorically, that the banking system for SMEs is still not working, despite the deceptive and misleading advertising by the bailed-out banks.

“The banks continue to stall progress by prioritising their own selfish interests over those of the wealth-generating SME sector. While it is critical to restore the Irish banking system to health, it cannot be done at the expense of the SME sector and its employees.”

Almost 1,000 bosses responded to the survey, carried out last week.

Some 37 per cent had requested additional or new bank facilities in the last three months, up from 36 per cent, with half refused.

The average time for a decision time has reduced from five to four weeks.

Of those approved for funding, 57 per cent have already drawn down the finance either fully or in part.

The association called on the Government to do more for businesses.

“The shrinking Irish banking system is not fit for purpose in providing an adequate retail service or development fund for Irish SMEs,” Mr Fielding added.

“The decision of Danske Bank to exit the market, immediately after Rabobank’s similar retreat, is a further blow to SME banking prospects.”

PA