Rising input costs, tighter access to finance and the impact of tariffs are the biggest risks facing Irish small and medium-sized enterprises, according to research from the Strategic Banking Corporation of Ireland (SBCI).

The state's promotional financial institution 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 strain on small companies.

A high number of Irish SMEs are exposed to multinationals and US-based trade, with 28 per cent of respondents earning at least a quarter of their revenues from doing business with multinational corporations and nearly 40 per cent of exporters trading with the US..

Three-quarters (73 per cent) of SMEs said the high cost of materials is one of the biggest risks they face in the current climate, and 71 per cent said access to finance presents a significant risk.

Seven in ten (69 per cent) cited the impact of tariffs, potentially causing disruption to global supply chains and limiting access to overseas markets, as a key risk ahead of the possible introduction of 30 per cent tariffs on EU goods entering the US next month.

Despite the risks, Irish businesses are largely positive about their financial outlook and growth prospects, and many are planning further hiring and investment.

A total of 70 per cent anticipate their financial position will improve in the next 12 months, while 60 per cent plan to hire more staff, and 64 per cent expect strong investment growth in both the next 18 months and the next five years or more.

Furthermore, two-thirds (66 per cent) are optimistic about the medium term, defined as 19 months to five years.

"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," said June Butler, chief executive of SCBI.

"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.”

The research also shows that solar panels (57 per cent) are the most popular green investment choice among small businesses, ahead of heating systems (44 per cent), ventilation systems (35 per cent) and electric vehicles (24 per cent).

However, a growing number of firms are now shifting towards complex investments such as building-integrated systems for heating and ventilation.

Four in ten (39 per cent)said these investments were driven by a desire to be more sustainable, while a third (32 per cent) said they were motivated to reduce costs, and 16 per cent said they were designed to build customer loyalty and enhance the reputation of their brand.

The survey was carried out among 266 respondents across Ireland.

(Pic: Getty Images)