The number of small and medium sized enterprises being refused loans by banks is falling, but so is the number looking for credit, according to a survey by business lobby group Isme.
It found that the number of firms refused credit by their banks had fallen from 42 per cent to 33 per cent in the last three months.
Surveys in March and June showed that 55 per cent of small and medium firms had been refused finance in the previous three months.
More than three fifths (62 per cent) of the 724 respondents had made an informal approach to their bank for credit. This was the same as in the previous quarter but significantly lower than the June (88 per cent) and March (90 per cent) figures.
Isme said 60 per cent of requests in the last quarter were for changes to overdraft limits, with a further 39 per cent seeking term loans. Some 62 per cent of applications attracted higher interest rates, while 42 per cent of applicants were required to commit greater collateral.
The number of respondents who felt banks were making it difficult to access finance also fell, from 83 to 68 per cent in the period.
Isme chief executive Mark Fielding said uncertainty surrounding the availability of credit to small businesses had resulted in a lower number of applications.
"The recent spate of refusals and anecdotal evidence combined with the economic uncertainty is tending to discourage businesses from approaching their banks," he said.
He said a bank combining Irish Nationwide Building Society, EBS, Royal Bank of Scotland Ireland and Irish Life and Permanent should be launched to challenge the duopoly of AIB and Bank of Ireland.
