Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Deputy O'Sullivan for the question. SMEs are the lifeblood of the Irish economy and they account for 99.8% of all businesses in Ireland, along with 69.2% of all employment in the business economy. Recognising the importance of SMEs to Ireland, my Department has regularly carried out SME credit demand surveys since 2011. These surveys are critical tools to understand how the sector is performing and how needs for credit are being met.

The survey series provides an overview of the economic context and Government support measures. It includes detailed findings on business performance, investment activity and company assets. The survey series also provides the Government with vital information on which to base policy initiatives that support businesses to manage rising costs and further invest. This includes the temporary business energy support scheme, the Ukraine credit guarantee scheme and the growth and sustainability loan scheme among a range of other policy measures.

The most recent SME credit demand survey in its series, published in April 2024, focuses on the timeframe from January 2023 to December 2023. Unlike previous surveys conducted biannually, this was the first survey to cover an entire calendar year, in line with a recommendation from the retail banking review of 2022. This survey was conducted by Ipsos B&A on behalf of my Department. This survey on SME credit demand in Ireland is the most extensive, encompassing more than 1,500 participants engaged in detailed conversations. It provides a thorough overview of the SME sector in Ireland, ensuring that micro-enterprises, small businesses and medium-sized enterprises are proportionately represented based on their prevalence in the country.

The survey reveals a nuanced picture of SME trading performance in 2023. While 52% of SMEs reported increased turnover, this figure is slightly lower than the previous year. Notably, profitability saw an uptick, with 74% of SMEs reporting profits, compared to 68% in the prior period. This suggests a focus on cost management and efficiency. Credit demand remained steady, with 18%, or nearly one in five, of SMEs seeking bank finance in 2023.

The primary reason for not seeking credit was the availability of sufficient internal funds, at 76%, indicating a degree of financial prudence among SMEs. Demand for non-bank finance rose to 9%, reflecting a diversification of funding sources. The decline rate for applications held steady at 11%, with the main reason being failure to meet lending criteria. A total of 36% of applicants were required to provide collateral, a significant increase from the previous period. I can provide more information in response to Deputy O'Sullivan.

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