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Background Notes

Introduction

The “Access to Finance” survey was first carried out by the CSO for reference year 2010. This most recent survey was undertaken for reference year 2014 for all SMEs. Only independent SMEs are included in this survey, i.e. no subsidiary enterprises were selected on the assumption that their finance arrangements may be organised or influenced by the Group HQ.

The aim of the survey is to examine the different types of finance sought by SMEs, the reasons for which finance is sought and how successful these finance applications are.  There are significant methodological differences between the 2010 and 2014 Access to Finance surveys and so the results are not comparable.  Different questions were asked, and in particular the inclusion of micro sized enterprises in the 2014 Access to Finance survey introduces a significant change in the results. These micro sized enterprises were not surveyed in the 2010 Access to Finance survey. This release shows that the access to finance experience for micro sized enterprises can be quite different to larger size classes of SMEs. 

Reference Period

2014, with a limited amount of estimated data for the years 2015 - 2017

Scope

The scope of the survey was enterprises in the non-financial market sectors that employed between 1 and 249 persons in the reference year 2014, and which continued to employ at least 1 person at the time of the survey. The enterprises in scope should be financially independent, i.e, not subsidiaries of another enterprise.

Size Classes

Micro 1 – 9 Persons employed
Small    10 – 49 Persons employed
Medium 50 – 249 Persons employed
All Small and Medium Enterprises Under 250 Persons employed

Growth Types

Enterprises classed as “high-potential start-ups” are SMEs established between 2010 and 2014 whose employment increased by at least 20% per annum over that period.
SMEs classed as “other high growth” are enterprises established prior to 2010 whose employment increased by at least 20% per annum between 2010 and 2014.  
The remaining SMEs can be classed as “other” enterprises. 

Coverage

The sample was selected from the following NACE Rev 2 Divisions:

Sector    NACEDescription
B to E (05-39) Industry
F (41-43) Construction
G to N (excluding J, K and M) (45-56,68,77-82) Selected services
J (58-63) Information and communications
M (69-75) Professional, scientific and technical services

Sample size 

6,000 

Response Rate 

27.3%

Sampling errors 

As with all sample surveys, the estimates in this release are subject to sampling variability. All of the published estimates come from survey data and so have a degree of statistical error associated with them. The sample error for this survey has been calculated at just + or – 2.3% at 95% significance level. 

Questionnaire

The Survey Questionnaire can be found on the CSO website, under Surveys and Methodology, Business Sectors, Services, Survey Forms.

Glossary

Business Angels: A business angel, also known as an angel investor, is an affluent individual who provides capital for a business, typically an equity investment.

Equity Finance: Equity finance is the money raised for business activities by selling common or preferred stock to individual or institutional investors.

Factoring: Factoring is a financial transaction whereby a business sells its accounts receivable (i.e. invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business.

Hybrid Financing: Hybrid financing can be defined as a combined face of equity and debt. This means that the characteristics of both equity and bond can be found in hybrid financing.

Leasing: Leasing is a process by which a business can obtain the use of certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments. The lessee is the receiver of the services or the assets under the lease contract and the lessor is the owner of the assets.

Loan: A sum of money given from one party to another for use over a period of time. The money is paid back according to terms agreed upon by both parties, including the specified interest rates and the time frame over which the loan will be repaid.

Mezzanine Financing: A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the business if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.

Preferred Debt: Debt that takes precedence over other debts.

Subordinated Loan: A type of loan which ranks behind other debts should a business be wound up. Typical providers of subordinated loans are major shareholders or a parent business.

Venture Capital: Venture capital is money provided to a growing business for advertising, research, building infrastructure, developing products, etc. The investment business is called a venture capital business and the money that it gives is called venture capital.

Working Capital: The capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Fixed Assets: Assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment.

Personal Assets: A type of property which, in its most general definition, can include any asset other than real estate. The distinguishing factor between personal property and real estate is that personal property is movable.

Investment: An asset or item that is purchased with the hope that it will generate income or appreciate in the future.