Written answers

Thursday, 22 September 2022

Department of Finance

Departmental Surveys

Photo of Joe FlahertyJoe Flaherty (Longford-Westmeath, Fianna Fail)
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162. To ask the Minister for Finance the details of the SME Credit Demand Survey that was published by his Department in September 2022; and if he will make a statement on the matter. [46325/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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SMEs play a key role in the Irish economy, comprising 99.7% of the total enterprise population, 66.4% of employment, 43.6% of total turnover and 36.9% of gross value added (“GVA”) in the Business Economy . This is why my Department conducts the SME Credit Demand Survey and has been doing so biannually since 2011. The SME Credit Demand survey is an independent and statistically significant report that provides insights into the availability of, demand for credit and related issues amongst SMEs. In addition, the report is an important resource used for research by my Department in conjunction with the Central Bank, ESRI and others.

As the Deputy is aware, the latest SME Credit Demand Survey was published on the 5 September 2022 and the full report is available on www.gov.ie.

The results show that demand for bank credit has fallen steadily since the series commenced, with requests in the period falling from 39% of those surveyed in September 2012 to 16% in the most recent result (6 months to March 2022). The recent growth in non-bank finance activity as a source of credit for SMEs is an important contributing factor which is why a new question was introduced in the recent survey specifically in relation to demand for non-bank finance in its own right.

The 5% of SMEs who stated they applied for non-bank finance in the 6 months to March 2022 is notable and reflects a growing market share for this source of finance.

Of those SMEs who did not apply for bank finance the main stated reason was a lack of credit requirements due to sufficient internal funds, a reason cited by 76% of businesses not seeking credit (up from 72% in March 2021). Of those companies that have requested bank credit, expansion needs (42%) was the main reason for finance requests up from 32% in March 2021. Notably, expected future demand remains stable with 12% of SMEs expecting to apply for finance in the following six months, down from 13% during the corresponding period in 2021.

Despite ongoing uncertainty, SMEs have remained resilient with all sectors reporting an improvement in turnover performance compared to March 2021. With 45% of all businesses reported increased turnover in the six months up to March 2022 and 18% reporting a decrease. This is a significant improvement from the low levels recorded in March 2021.

Notably the biggest improvement seen was in the Hotel and Restaurant Sector with 66% reporting improved turnover. In addition, 61% of SMEs reported an increase in profit during 2022, compared to 53% in 2021. These positive financial results indicate SMEs are bouncing back to pre-pandemic profit levels. However, this resilience is being tested further with rising energy costs.

Government remains committed to supporting the business community through these challenging times and it will continue to monitor access to credit and related issues through inter aliamy Department’s SME Credit Demand Survey.

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