asked the Minister for Finance if the global loans scheme initiated by the European Investment Bank has been used in this country and if institutions in this country could avail of this scheme as a further incentive to promote establishment of small industries.
Ceisteanna—Questions. Oral Answers. - EIB Loans Scheme.
12.
Global loans from the European Investment Bank have indeed been used in this country. Since Ireland joined the Bank in 1973, seven such loans amounting to a total of £30 million have been provided to the Industrial Credit Company and the Agricultural Credit Corporation for on-lending to small and medium sized enterprises in the manufacturing and agri-business sectors. These loans, which can provide up to half the cost of new fixed assets, are particularly geared to small industry. In negotiations with the bank, it was arranged that individual sub-loans could be for as little as £17,000.
It is estimated that over 350 firms will benefit from the global loans provided to date. In the light of this strong demand, I expect that further global loans will be arranged as a continuing source of finance for small enterprises.
May I ask whether any institutions other than State or semi-State bodies may avail of these loans or have availed of them? Regardless of who avails of them, who gets the benefit of the low interest rates in these cases? How is it accounted for?
As regards the first part of the question, it is open to other institutions to avail of this. It will be a matter of negotiation between them and the European Investment Bank. Offhand, I am not aware of any other institutions that have done so but it is open to them to do it. In regard to the second part of the question, the benefit of the lower interest rate and—I do not think I mentioned this—of the fixed interest rate for the period of the loan, goes to the borrower, the small borrower, not the ICC or the ACC.
Since the disparity between the rates may be as high as 10 or 12 per cent, I am not aware that any moneys coming from the ACC or ICC have been lent at anything like the attractive rates at which they are borrowing which seems to run counter to what the Minister has just said.
In fact there is an addition to the rates to cover administrative costs. Up to very recently the addition in the case of the ICC was not even covering the full administrative cost; so, it has been increased slightly. If the Deputy inquires I think he will find that quite a number of people have availed in small industries of these loans and have got loans at substantially lower rates than are available anywhere else.
May I ask whether in the case of the ICC and/or the ACC there are two rates available? In other words, have the lower interest rates been reflected in their overall lending rates or have special rates been given to special projects, special people, special farmers, because I know that the rates generally, particularly in the ACC, are anything but attractive and have not been attractive for a long time?
This is a separate scheme and there are separate criteria which have to be complied with. There is an upper limit as to the value of gross assets and an upper limit for the number of employees and so on, but where people come within those criteria they get the lower rates. It is not a question of averaging out the high and low rates. A special low rate applies to these schemes if one comes within it.
That is not made known by these institutions.
Judging by the demand for them a lot of people seem to know about them.
It has been passed around but the general public do not know about it.