Irish SME Lending: What’s Really Happening (and What’s Next)
The Irish SME lending landscape in late 2025 is far more complex, and far more interesting, than headline numbers suggest. On one hand, businesses are carrying historically low levels of debt. On the other hand, confidence, investment appetite and funding structures are shifting in ways that will shape 2026 planning.
Below is a deeper look at what’s actually happening behind the scenes, what it means for SME owners, and how to prepare for funding conversations in the months ahead.
1. Many Irish SMEs Still Operate With No Bank Debt at All
Roughly 4 in 10 SMEs currently have zero bank debt, a level not seen since the recovery years after 2012. This “do nothing” mindset is understandable, businesses have weathered rising costs, rate hikes, energy shocks, and regulatory noise. For some owners, avoiding borrowing became a survival instinct.
But that caution now carries a different risk: under-investment. Firms holding off on equipment upgrades, staffing, automation or expansion are at risk of falling behind competitors who are getting ahead of the credit cycle.
For any business with growth plans for 2026, “no debt” shouldn’t automatically mean “no funding.”
2. SME Loan Costs Are Easing — but New Lending Is Still Soft
The cost of existing SME loans has fallen at its fastest quarterly rate in a decade, driven by easing market rates and a gradual recalibration by banks. Yet new lending volumes remain muted.
Why the disconnect?
Banks remain conservative on term lending.
SMEs are cautious about taking on long commitments.
Many owners still expect the application process to be lengthy or adversarial, even when it isn’t.
The opportunity here:
For well-prepared applications, approval odds are improving, especially when repayment capacity, sensitivity analysis and working capital logic are presented clearly.
3. Non-Bank Lenders Are Now Mainstream — and Blending Funding Is Rising
Around mid-40% of SMEs now use a mix of bank and non-bank funding. This is a significant shift.
Non-banks continue to grow because they offer:
Faster decisions
Flexible security positions
Interest-only periods
Bridging and capex structures banks won’t take on
Higher appetite for complexity
At the same time, more SMEs are taking advantage of SBCI-backed schemes, which can materially reduce the cost of long-term investment. Blending bank + non-bank + SBCI or grant options is quickly becoming the “smart money” structure.
But blending only works when the pieces are aligned, repayment logic, drawdown timing, collateral, term length, and refinancing strategy all need to hang together.
4. SME Confidence Is Split; and That’s Shaping Funding Behaviour
Irish SMEs today are cautious about costs and regulation, but more optimistic about their own business prospects. Many believe the wider economy may soften, yet feel their own position will improve.
This divergence explains why demand for credit is low, while confidence in access to finance is rising. SMEs believe funding is available, they just want to be certain it’s the right move.
What This Means for Your Funding Plans
If you are considering refinancing, expansion or revisiting an earlier decline, you will significantly improve your chances by:
Presenting a clear, lender-ready story
Providing projections with repayment logic and sensitivities
Structuring drawdowns in a way that matches your cash cycle
Exploring a blended funding model instead of relying on one provider
How NextStep Helps (and Gives You Time Back)
At NextStep Business Solutions, I manage the entire funding process:
Funding strategy and options mapping
Financial projections and repayment analysis
Complete lender-ready proposal papers
Liaison with banks, non-banks, SBCI partners and agencies
End-to-end application management
You stay focused on running the business. I keep the application moving.
If you’re planning a refinance, expansion or second attempt after a decline, message me and I’ll help map the fastest, cleanest route to “yes.”