New lending to SMEs continued to grow in the third quarter of last year, and was 5.1 per cent higher than the same period the previous year, according to the Central Bank market report .
The figures show that lending growth was highest in the manufacturing, hotel and restaurant, and construction sectors.
However, rejection rates across all finance products have increased to 16 per cent, up from 11 per cent.
It also found that interest rates charged to SMEs are higher than euro area averages, with the average interest rate declining from 5.9 per cent to 5.5 per cent. One of the main factors causing this is likely to be the lack of competition in the Irish banking industry.The combined market share of the three main lenders in this country, AIB, Bank of Ireland and Ulster Bank, is 93 per cent.
The Central Bank published the SME Market Report for the second half of 2016.
It says bank finance applications are declining, and driven by a fall in demand for renewed and restructured products. The report shows that loan performance is improving. In June last year, 24 per cent of SMEs’ outstanding balances were in default, down from 41 per cent in 2013.