Last Monday the Bank of Ireland announced a new scheme to help businesses short of capital to access funds during the current difficult economic climate.
Last Monday the Bank of Ireland announced a new scheme to help businesses short of capital to access funds during the current difficult economic climate.
The new €250m business support fund will support businesses in their short- to medium-term needs, and will be available to both new and existing business customers at a variable interest rate of 7.5 per cent.
More importantly, the bank said small and medium enterprises (SMEs) which have been badly hit by the current downturn can access the funds now and defer the repayment for up to 12 calendar months. Damian Young, the bank’s head of small business, said this initiative “will enable customers extend or restructure their existing facilities or introduce new facilities into the business”.
In the months since the world’s economic problems became evidenced, SMEs have been crying for major financial support to prevent a total collapse of the economy. Meanwhile, the Small Firms Association (SFA) has consistently maintained that its members are suffering from the credit crisis.
Reacting to the Bank of Ireland’s new loan scheme, SMA assistant director Avine McNally – who said her organisation “is inundated on a daily basis with calls from small firms stating that their restricted access to credit is reaching crisis point” – highlighted some of the present financial difficulties as limited access to funds, reduced spending, and current extension of creditor days. She insisted that these restrictions are having an undue impact on business cash flows, and believes that the new scheme will be of immense help to SMEs.
While this new line of credit certainly provides opportunities for SMEs to grow their business during a difficult time, Metro Éireann believes that the amount is simply not enough to revive our cash-strapped enterprisers. From all indications, Irish SMEs would require a significant level of long-term funding to effectively make a difference during the economic bust.
A look at developments across the world shows that the credit problem is not just a matter for financial institutions, but also for governments. There’s no doubt that many foreign governments are currently pumping money into their economies and cutting taxes to encourage more people to spend. It is therefore absolutely important that the Government here, not just our banks, looks at ways of helping SMEs to have access to more funding, especially long-term capital.
editor@metroeireann.com
