Irish SMEs three times as likely to use bank debt as UK counterparts

  • Written By: Natalie Bruce
  • Published: Mon, 01 Jul 2019 15:35 GMT
  • Irish businesses are three times as likely to rely on bank debt as UK businesses (58% vs 16%)
  • 35% of Irish businesses have tried and failed to raise finance at least once
  • 80% of businesses who did raise finance had not used a tax-efficient route

Over a third (35%) of businesses in Ireland have tried and failed to raise finance at least once, according to a new report, Dream Bigger: Funding ambition from Smith & Williamson, the financial and professional services firm.

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A significant reason behind the failure rate could be the lack of knowledge about external finance, and a lack of alternative finance available. The majority of Irish businesses (58%) are still using traditional methods of finance such as bank loans, but scale-ups are starting to lean towards alternative methods. According to the report, 75% of businesses are not confident about securing peer-to-peer lending, and 64% are unsure how the process with angel investors works. Additionally, seven in ten (71%) were not confident about their understanding of crowdfunding, and two thirds (64%) said they would not know how to approach venture capital investors.

Banks are clearly the leading choice for businesses looking for finance, 78% of founders said they are confident they understand the process of raising money from a bank, and 61% see debt as a way of retaining control. Compared to the UK, the difference is stark; Irish businesses are three times as likely to have used bank debt as UK businesses (58% vs 16%) and UK businesses are eight times as likely to have turned to crowdfunding as Irish businesses (24% vs 3%).

Of those who did manage to raise finance 80% did not use a tax-efficient route, such as the Start Up Refunds for Entrepreneurs (SURE), or the Employment and Investment Incentive (EII), with 69% admitting they were not confident of the process involved with tax credits.

Paul Wyse, Managing Director, Smith & Williamson Dublin, said: “Since the financial crisis, banks have been more cautious about lending and this has created a shortage of capital in the market. SMEs must look at alternative ways to meet their financing needs through for example business angels, venture capital, Enterprise Ireland and new providers of alternative finance. Doing research, knowing your financing options and how you can work with funders and investors will put businesses in a stronger position.

“Founders must be prepared to meet the needs of funders and investors; ambition and innovation are little use without a concise business plan in place and a great management team to execute it. The businesses that have these in place are far more likely to succeed in fundraising.

“Surrounding yourself with good people, particularly your management team, your professional advisors and the right investors is critical to success. If business leaders get the right kind of help from the start, we will see an increase in Ireland’s businesses growing and thriving.”

Dream Bigger: Funding ambition is based on a survey of over 100 founders of SMEs across Ireland. The survey was conducted in April 2019.

Natalie Bruce
Media Relations Manager
0207 131 8265

Notes to editors
Smith & Williamson is a leading financial and professional services firm providing a comprehensive range of investment management, tax, financial advisory and accountancy services to private clients and their business interests. The firm’s c1,800 people operate from a network of 11 offices: London, Belfast, Birmingham, Bristol, Dublin (City and Sandyford), Glasgow, Guildford, Jersey, Salisbury and Southampton. Smith & Williamson is part of The Tilney Smith & Williamson Group.

Smith & Williamson LLP
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities.
Smith & Williamson LLP is a member of Nexia International, a leading, global network of independent accounting and consulting firms. Please see for further details.
Smith & Williamson LLP is part of the Tilney Smith & Williamson group.
Registered in England No. OC 369631.


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