New guidance shows pitfalls of using own working capital for capital projects
75% of Irish firms are using internal funds to finance their investment activities, according to a European Investment Bank survey. This is well above the EU average of 60%.
The Credit Review Office has issued a guidance note for small firms that are considering using ‘own funds’ to finance an investment project. The note acknowledges that self-funding is the cheapest form of finance available to businesses and should be considered. It highlights, however, some pitfalls in pursuing this option and the risks to consider at the outset of the project.
The guidance note, ‘Funding a Capital Project from “Own Funds” or Working Capital – SMEs’, is available on the Credit Review Office here.
More information about the Credit Review Office is available on the SFA website here or you can visit the Credit Review Office website at www.creditreview.ie. A separate piece of research is being carried out by the Credit Review Office to explore whether changes in banks’ physical distribution networks are adversely affecting demand for credit.
Members may also be interested in the Credit Review Office’s guidance note for SMEs who have had their loans sold to another lender, which is available here.