The deleveraging of the banking sector post-financial crisis was quickly recognised by Government as a potentially mortal threat to the country’s small and medium-sized (SME) businesses. Among the many measures aimed at mitigating this was the establishment of the Credit Review Office, an organisation that helps SME or farm borrowers who have had an application for credit declined or reduced, and who feel that they have a viable business proposition.

The effectiveness of the CRO has been the subject of debate but the Department of finance has persisted with its strategy and in Budget 2014 increased the threshold of loan application appeals from €500,000 to €3m. This, the Department states, “Will facilitate requests from a broader range of SMEs as well as large requests for refinancing.”

Budget 2014 also introduced a range of other measures for the SME sector as the Government sought to redress the perceived imbalance between support for the multinational sector and that available to indigenous industry, including:

•    Measures to improve awareness of the Range of SME State Supports
•    A Trade Finance Initiative to Support Exports
•    Capital Gains Tax Relief for re-investment
•    Enhancement of the Employment and Investment Incentive

One further measure which perhaps had less publicity was the introduction of a programme “to enhance the financial and business capacity of SMEs.”

Skillnets was requested by the State Bodies Group (chaired by Department of Finance) to develop a programme to address the perceived gap in financial skills in SMEs. The original programme, 'Building Financial Capability in SMEs,' was funded by the Department of Jobs, Enterprise and Innovation. The initiative was proposed as part of a wider suite of skills related actions designed to address financial capability in second and third level educational programmes.

The primary opjective of this 2-day programme with expert mentoring support was “to equip SMEs with the necessary tools to improve their ability to secure financing for their business.” The programme began on a pilot basis in early 2014 and had a target of the participation of 1,000 SMEs in 2014.

Regrettably it is understood that take-up of the programme was extremely disappointing. This is unfortunate as the benefits of the programme for SME owners/managers as set out by the Skillnets website are clear:

•    Raise their awareness of the sources of finance available
•    Increase their confidence and ability to discuss their business’s finances
•    Increase their confidence and ability to make a case for securing finance for their business
•    Increase their understanding of how banks are assessing credit applications in a non-asset backed application
•    Raise their awareness of how the Credit Review Office might assist their business in the event that an application for credit is declined.

In this respect, the behavior of Ireland’s SME owner/managers is remarkably similar to Irish consumers who have an equally stubborn resistance to improving their financial knowledge and capability. In fairness, however, this type of behavior is by no means exclusive to this country.

The assumption that enterprising individuals who have the imagination and energy to take a business idea to market have also the financial skills to maximise its potential and grow that business is deeply mistaken. In fact, the same entrepreneurial qualities owner/managers possess are often mutually exclusive of the more mundane financial skillset – entrepreneurs are less concerned with “the details”, until it is too late. The classic case is in the area of credit control where the owner with sights set firmly on business growth overlooks basic credit checking and collections.

Aside from natural resistance, another reasons for the low take-up of the financial capability programme may be format. Many individuals in business might find the idea of a two-day off-site session impracticable. In this respect an online, eLearning delivery model might be more suitable.

For this particular audience, eLearning offers massive advantages over stand-up delivery:
 
•    eLearning is always “on”; it allows “anytime, anyplace” access through multiple devices (desktop, tablet, mobile)
•    It is instantly updatable: it can be amended and/or added to over time
•    It is fully trackable: usage and completion rates may be measured
•    Certification can be achieved through online assessment through a question bank

Technnology such as eLearning, and quasi-education, is increasingly a feature of the delivery of financial services by new entrants. The thinking here that SMEs and individuals have critical but latent needs which are untapped through ignorance is entirely correct. Sadly, even when needs are identified such as a need for funding, it seems that all too many lack the skills to position their application in the best light and, worse, fail to identify this as a problem in the first place.