Ireland's Small Firms Association (SFA) has urged the Irish authorities to concentrate on the 'three Cs' when making future policy decisions affecting the small business sector.

In its Autumn Economic Statement, published earlier this month, the SFA stressed the importance of restoring confidence, boosting cost competitiveness, and ensuring that small businesses have adequate cashflow by addressing the relative lack of financing available to such enterprises.

Commenting with regard to the latter issue, the Association's Acting Director, Avine McNally explained that:

“Access to credit remains a serious challenge, with one in five small businesses in Ireland not getting enough credit, we have a very serious problem, with potentially 50,000 small business closures and 160,000 jobs lost as a result.”

This issue was highlighted in the Association's Summer Business Sentiment Survey, published in June, which revealed that one-fifth of companies had seen the availability of working capital decrease in the three months prior, while 13% revealed that investment finance availability had also decreased.

“There has to be a greater understanding in the banks of the environment in which small firms are trading,"McNally observed, going on to explain that "banks normally appraise future credit risk on the last few years of a companies financial performance, given the current situation, this type of system is unlikely to provide a full picture of the overall viability of a business and this has to be taken into account if many viable businesses are to be given the credit they so critically require."

In light of the fact that the risk assessment criteria currently being employed by the banks make it unlikely that they will change their lending patterns in the near future, the SFA feels that government intervention may be required in order to boost small business access to credit and other financing options.

The acting SFA chief also suggested that increasing business costs are hitting the Republic's SMEs and micro-businesses hard, with the majority of the increases - to public utilities such as water, gas, electricity, housing, education, and transport - out of the control of the small business owner, and, for the most part, unavoidable.

“Small Irish businesses have taken harsh steps to regain cost-competitiveness, yet many costs remain outside their control as they are government influenced. When these costs are passed on to the rest of the economy, competitiveness and jobs are lost,” McNally warned.

In conclusion, she stated that:

“While we strive to be confident about the economy there are still signs of concern – housing prices are still falling; consumer confidence and spending will continue to be undermined due to pay cuts; an uncertain labour market and further cuts in Government expenditure. On the positive side, the external economic environment is gradually getting stronger and the challenge is to ensure that the Irish economy and Irish small businesses will be in a position to exploit this recovery.”