Optimism among Irish small- and medium-sized enterprises (SMEs) has recovered to pre-Covid levels, a survey from Linked Finance has found.
The Irish peer-to-peer lending platform’s inaugural Linked Finance SME Confidence Index, which is based on research conducted by Behaviours & Attitudes, rose to 65.6 (out of 100) in the second quarter of the year. This is up from 48.7 a year ago in the same quarter last year and above the pre-pandemic level of 65.2 in the fourth quarter of 2019.
This has filtered through to improved profitability with 65 per cent of SMEs achieving profits that are the same or better than a year ago, compared to 30 per cent in the second quarter last year.
Now 76 per cent of SMEs expect trading activity next quarter to be the same or better, up from just 46 per cent last year.
However, 45 per cent of micro-enterprises, those with one to three employees, experienced lower trading performance than a year ago, although this is down significantly from the 73 per cent in this position in 2020.
Two-thirds of businesses (66 per cent) said they were satisfied with the Irish government’s efforts to aid small businesses during the Covid crisis.
“It is very encouraging that Irish SMEs are recovering from the huge challenges they have faced through the pandemic,” said Niall O’Grady, chief executive of Linked Finance.
“Not only has business optimism rebounded to pre-pandemic levels, but the future outlook is for this trend to strengthen. We are, however, still seeing pockets of the economy that are slower to rebound, and it’s clear that the pace of recovery is lagging for domestic market focussed micro-businesses.
“The inflationary trend is another sign of the economy heating up, although now more than ever businesses need to be careful to maintain competitiveness, particularly where reliant on export markets. Businesses are giving the government a thumbs up for the Covid supports received, even if it’s clear that sectors like travel, hospitality and live entertainment still bear a heavy burden due to uncertainty regarding their markets.
“The new Linked Finance SME Confidence Index will provide a quarterly barometer of sentiment in this all-important sector that is the engine room of the economy, accounting for over one million jobs. In January we became the first non-bank lender to be approved under the government Covid-19 credit guarantee scheme, and we are committed to continuing to help small businesses get back on their feet.”
Linked Finance has deployed over €10m (£8.3m) worth of loans to SMEs since it became the first non-bank lender to offer loans under the government’s Covid-19 credit guarantee scheme in January and was granted an additional €5m under the scheme in June.
The survey reflects Linked Finance’s recent performance, having hit record monthly lending volumes of €5.5m in July.
In the year-to-date Linked Finance has issued over €21.6m in loans, compared to €19.9m for the whole of 2020.