SME Outlook Report - 2025
Costs, access to finance and tariffs are biggest worries for Irish SMEs, SBCI research reveals
- Businesses positive about getting stronger and hiring more employees despite uncertainty
- 44% of SMEs say they use a mix of banks and non-bank lenders to meet their financing needs
- High degree of exposure among Irish SMEs to multinationals and US trade disruption
- Strong motivation among SMEs to increase the sustainability of their business
Rising input costs, tighter access to finance and the impact of tariffs are the biggest risks facing Irish SMEs, according to new research from the Strategic Banking Corporation of Ireland (SBCI), the State’s promotional financial institution. The SBCI has channelled over €4.5bn in funding to over 63,000 Irish SMEs to date.
The research also identified high energy and transport costs and difficulties in hiring people with the right skills as factors that added to the strains on SMEs.
The research revealed a high degree of Irish SME exposure to multinationals and US-based trade, with 28% of respondents earning at least a quarter of their revenues from doing business with multinational corporations (MNCs), and nearly 40% of exporters trading with the US, making them sensitive to global trends.
Key findings – risks to SMEs:
- 73% of respondent SMEs said the high cost of materials is one of the biggest risks they face in the current climate
- 71% said access to finance presents a significant risk
- 69% said the impact of tariffs potentially causing disruption to global supply chains and limiting access to overseas markets is a key risk
Cautious optimism among SMEs:
Despite the risks, Irish SMEs are largely positive about their financial outlook and growth prospects, with many planning to hire more people and invest further in their businesses. However, the overall mood remains cautious.
- 70% expect their financial position to improve in the next 12 months
- 60% plan to hire more employees
- 64% expect strong investment growth in the short (defined as up to 18 months) and long term (defined as 5+ years)
- 66% are optimistic about the medium term (defined as 19 months to 5 years).
SMEs prioritising energy efficiency over other sustainable investments
Solar panels remain the most popular green investment choice among SMEs, but there is evidence that many businesses are now shifting towards more complex investments such as building-integrated systems for heating and ventilation.
This suggests that more SMEs are taking a strategic approach to sustainability, focusing on lowering energy costs and improving sustainability at an operational level.
39% of respondents said these investments were driven by a desire to be more sustainable; 32% said they were motivated to reduce costs; while 16% said they were designed to build customer loyalty and enhance the reputation of their brand.
The preferences among SMEs for sustainable investments was:
- Solar Panels: 57%
- Heating Systems: 44%
- Ventilation Systems: 35%
- Electric Vehicles: 24%
Note: Respondents were allowed to select multiple options; therefore, the total percentages may exceed 100%
June Butler, Chief Executive of the SBCI, said:
“As Ireland’s promotional financial institution and a supporter of over 63,000 Irish SMEs, we are committed to understanding the pressures these businesses face and providing financial solutions to help them overcome these challenges.
Our research shows an encouraging level of confidence among SMEs about the future. However, this optimism is tempered by the reality of the risks they continue to navigate.
We’ll continue to work with our lending partners, including banks, non-banks and credit unions, to devise new and better ways for SMEs to access finance. Our goal is to help SMEs to grow their revenues, hire more people and become more sustainable on their growth journey.”