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SMEs face higher rates for loans

Fewer banks in Ireland hold an ever larger market share of the lending to SMEs, according to the Central Bank’s SME Market Report.

The data found that SMEs with loans of less than €250,000 are being hit with interest rates that are as much as three percentage points higher than those with debt of €1m or more. Interest rates for businesses generally in Ireland remain “significantly above euro area averages”, running at around two percentage points higher than other European countries.

But the data, in particular highlights discrepancies in the interest rate charged depending on the size of the loan.

Overall the annual gross new lending to non-financial, non-real estate SMEs in three months to September 2017 was 24pc higher than the previous year, with the largest increases to be found in the wholesale, retail, trade and repairs sectors.

Demand from SMEs for credit during September was low, with the share of SMEs applying for bank loans at 21pc in September, according to the ECB SAFE survey.

In Ireland, just over half of SMEs reported that they did not apply for bank loans because of sufficient internal funding during the period. However the level of SME loan rejection rates has also increased during the period, to 13.9pc in September 2017, from 8.2pc in March of last year.