Irish SMEs eschew banks in favour of P2P loans
Small businesses in Ireland are favouring peer-to-peer lenders for finance due to their speed and flexibility, a business expert has claimed.
Neil McDonnell, chief executive of the Irish SME Association (ISME), said that the business lobby group’s members are increasingly turning to non-bank lenders such as P2P platforms Linked Finance, Grid and Flender, or merchant cash services that extend credit and take a percentage of till receipts.
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He blasted the “dreadful service” available from high street banks, according to a report on the Sunday Times, and said that small firms cannot be bothered to invest the time applying for loans with them “to get a slow no”.
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McDonnell reportedly said that small businesses like the quick turnaround times on loan applications from alternative lenders and used them for working capital, despite the higher cost of finance.
Banks are reporting bumper profits yet lending to small businesses remains subdued, indicating that this area of finance is not a key focus for them. The latest bank lending survey from Ireland’s central bank, cited by the Sunday Times, found that lenders in the country had tightened their credit standards in the second quarter, while demand from firms – except small businesses – increased slightly.
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