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13-07-2010

CPA Welcomes €12bn scheme for Small and Medium Enterprise

Comprehensive and timely administration of scheme is critical– Meagher

The Institute of Certified Public Accountants in Ireland (CPA) welcomed the launch today of the €12bn scheme to extend credit facilities to small and medium enterprise but advised that it can only be effective if administered in a comprehensive and timely fashion. Details of the scheme, which will see AIB and Bank of Ireland each lend €3bn to viable small businesses over a two year period, were announced this morning by Minister of Finance, Brian Lenihan TD.

Mr Geoffrey Meagher, President of the Institute of Certified Public Accountants said, "Over 90% of businesses in Ireland are either micro, small or medium enterprises. These companies must be supported as they will be critical to our economic recovery.

"In a survey of 200 CPA members across Ireland this week, more than 75 per cent said they had witnessed viable businesses getting into trading difficulties due to credit restrictions. It has been apparent for quite some time now that the SME sector in Ireland is struggling. The structure of this scheme must support both viable new businesses and the growth of existing businesses in the SME sector.

“This scheme will prove to be a lifeline to many viable small businesses around the country, but only if it is administered in a timely and comprehensive fashion. Lack of credit is impacting cash flow, growth opportunities and ultimately jobs. The banks need to begin allocating this fund as a matter of urgency" he said.

“It is also critical that the banks administer these funds in an open and transparent way. The banks must be obliged to report quarterly on the allocation of funds from this scheme. We cannot have a repeat of the current situation where there is an ongoing war of words between the banks and the SME sector regarding the availability of credit”, he said.

“The reality is that only records of formal applications for bank credit are maintained by the banks. The hundreds of informal conversations SME owners are having with bank managers every day of the week cannot be captured and this is leading to the discrepancies between what banks say they are lending and the evidence being captured by the CPA Institute and others”.

Mr Meagher said that it was crucially important that SME owners and managers complete a formal loan application process. “The benefit of this is two fold – it will support the accurate recording and reporting of credit applications and approvals, but critically it also affords the business owner the opportunity to appeal a loan refusal with the new Credit Review body”.

Mr Meagher added: "The CPA has consistently voiced its concerns on the lack of availability of credit and the urgent need for banks to release working capital finance to the SME sector throughout the current crisis. In principle, we welcome this new scheme. The banks are receiving government and taxpayer support at a very low rate of interest. This benefit must be passed on to SME businesses that have the capacity to deliver employment and begin our much needed economic recovery”.

The CPA is one of the main Irish accountancy bodies with more than 5,000 members and students in the island of Ireland. The CPA designation is the most commonly used designation worldwide for professional accountants and the Institute’s qualification enjoys wide international recognition. Its current membership operates in public practice, industry, financial services and the public sector and CPAs work in over 31 countries around the world.

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