The Strategic Banking Corporation of Ireland (SBCI) has released its 2025 SME Outlook Report, offering a timely snapshot of how the Irish business community is feeling about the future. The message? Irish SMEs are optimistic about growth, but cautious about the challenges ahead, particularly in the areas of finance, cost pressures, and sustainability.
Optimism with a Strategic Edge
Drawing on responses from 266 SMEs surveyed nationwide between May and June, the report reveals that 70% of Irish SMEs expect their financial position to improve over the next 12 months. Encouragingly, 64% plan to increase investment and 60% are looking to grow their teams.
But this optimism isn’t reckless. SMEs are taking a measured, strategic approach, balancing ambition with risk. They’re planning for growth but doing so with eyes wide open to the challenges ahead.
Persistent Pressures: Rising Costs and Financing Barriers
Despite the generally positive sentiment, Irish SMEs are still grappling with familiar challenges:
· Rising input and energy costs
· Labour shortages
· Access to finance
Notably, 73% of respondents cite material costs as a major concern, and 66% say personal guarantees are a barrier when seeking finance. Even with falling interest rates in 2025, 62% of SMEs still find credit too expensive and 60% struggle with administrative red tape. There is a clear preference for medium and long-term financing, reflecting a desire for stability and sustainable growth.
Sustainability: Bridging the Gap Between Planning and Action
Sustainability is firmly on the agenda, but action is lagging ambition. While 62% of businesses have developed environmental plans, only 20% are currently investing, and just 19% plan to increase their green investment soon.
Key barriers include:
· Long payback periods (40%)
· Uncertainty about returns (39%)
· Competing priorities (31%)
However, the nature of green investment is evolving. SMEs are shifting from visible green technologies like electric vehicles, towards behind-the-scenes upgrades, including heating and ventilation systems.
The motivations? Lower costs, improved sustainability and stronger brand reputation, a sign that environmental responsibility is becoming a core business strategy.
Global Exposure: Balancing Opportunity and Risk
Irish SMEs are increasingly integrated into global markets. Nearly 40% of exporters trade with the United States, and 28% derive over a quarter of their revenue from multinational corporations. This global exposure brings opportunity, but also risk. Geopolitical tensions and trade tariffs are real concerns, making resilience and adaptability more important than ever.
Diversifying Finance: A Smarter Approach
In response to ongoing financing challenges, SMEs are broadening their funding sources. While 94% continue to rely on at least one pillar bank, 44% now combine traditional and non-bank lenders. This shift reflects a growing focus on flexibility and financial resilience.
Looking Ahead: Investing with Purpose
The SBCI 2025 SME Outlook Report presents a picture of a sector in transition. Irish SMEs are embracing a more strategic, long-term approach, investing in people, processes, and sustainability; not just to grow, but to thrive in an unpredictable world.
The message is clear: strategic investment, adaptability, and resilience will be the cornerstones of future success.
To download the full SBCI 2025 SME Outlook Report, visit https://sbci.gov.ie/reports
To learn more about the SBCI supports and funding opportunities, visit https://sbci.gov.ie/