Irish Banks Focus on Lending to Small Businesses (IRE, AIBYY)

Both the Bank of Ireland (ADR) (NYSE:IRE) and Allied Irish Banks, plc. (ADR) (PINK:AIBYY) have come to learn quite a bit since the Irish bailout and I think U.S. banks should sit up and take note: Irish banks learned, that like politics, all banking is local.

The rush away from corporate conglomerate banking in the U.S. to “Community Banks,” and Thrifts, and Credit Unions last year was a wake-up call as small businesses went for loans at cheaper interest rates and found banking conglomerates had a clinched fist around every dollar. 

Irish banks on the other hand have returned to health by lending… and teaching… here’s what I mean…
Bank of Ireland spent a lot of money developing software and then last month offered a cash flow management tool, Cashflow Planner, designed for owners and managers of small businesses. 

The planner which is an interactive tool available via the Bank’s website will help businesses determine their cash requirements; something IRE knows about. It will assist small businesses in predicting the inflows and outflows of cash and also will aid them when making an application for credit facilities.

Cashlow Planner can be tailored to meet the requirements of any business and the results and reports generated can be saved by the user for their own use. The reports can also be used to help when discussing their needs with their local branch.

When all of the relevant data has been input, the planner will produce a 12-month cashflow and P&L forecast which will assist the business owner understand their money situation requirements in ‘real time’ and allowing the business owner to amend any details. The business owner can also see the impact that this will have on cashflow and overall profitability.

And just this month Allied Irish Banks published a new initiative focused on demystifying the mortgage process for customers.

The new “Mortgage Pack” is aimed at supporting customers as they progress through the mortgage application process. It contains pull out guides such as, moving into your first home, step by step guide to the mortgage process, an A-Z jargon buster and what to look for when house hunting.

“We know from our customers that many of them find the application process demanding. That’s why we developed this guide, to demystify the process and show customers what we will need to see when they approach us for a mortgage.

“We want to let our customers know that we’ll be with them throughout the process. If they follow these steps then we will be ready to help them on their way to getting a new home.”

On Feb 2 AIBYY introduced the Job Creation Loan for small and medium businesses. AIBYY ran a pilot program during the second half of 2011. During the pilot AIB received 962 applications from firms seeking total facilities of 36.5 million euros. At the end of December 2011, total facilities of 16 million euros for 480 applications had been sanctioned. A further 16.2 million euros for 391 applications are in progress.

The loan offers a leading market rate and is designed to support small businesses across all sectors who are investing in new projects or initiatives that result in the creation of jobs. To qualify for finance under the loan, customers need to invest in a new project or initiative which results in the creation of at least one permanent full-time job. They must also meet normal lending criteria and guidelines.

Typical projects that can be undertaken with the support of the AIBYY Job Creation Loan are: New business acquisition, Financing for overseas sales, Building acquisition/remodelling, and the Purchase of vehicles, plant, machinery or equipment for use by customers’ business that cannot be secured through normal leasing arrangements.

John Webb, Head of Business Banking at AIBYY said, “Small and medium size businesses are hugely important to AIB, representing more than 9 out of 10 of our business customers. By virtue of their size, these businesses tend to be flexible and responsive to a change in market conditions and are often to the forefront in leading the creation of new job opportunities and supporting economic recovery at local and national levels. The introduction of this special loan rate should help incentivise expansion oriented businesses and we are ready and waiting to discuss eligible projects.”

I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.