REACTION:THE GOVERNMENT remains concerned about the proportion of small firms refused credit by the banks, Minister for Finance Brian Lenihan said last night.

He said all viable businesses should have access to credit.According to the Mazars report, 24 per cent of small firms were decline loans during the nine months to February. Every action taken by the Government since last autumn had been “aimed at increasing the flow of credit to the real economy”.

The report showed Bank of Ireland and AIB had honoured a commitment made as part of their recapitalisation to make a dedicated pool of funding available to SMEs, Mr Lenihan said.

“I can confirm that this commitment has been honoured and verified by the Financial Regulator.”

AIB welcomed the report and said 80 per cent of credit requests it received were approved and added it was seeking to develop its relationship with the SME sector, as recommended by the report.

Bank of Ireland said the report should encourage viable small businesses to approach their banks for funding support.

Patricia Callen, director of the Small Firms Association, said running out of money was the main reason for an SME failure and that the refusal of a quarter of all loan applications put 62,500 small businesses at risk.

Mark Fielding, chief executive the Irish Small and Medium Enterprises association (Isme), said the report confirmed the discrepancy between the experience of small firms and the banks’ reported credit refusal rate.

He also found it disappointing that Mazars had been “unable to secure any meaningful analysis of credit inquiries” as these are not tracked by banks.