The second Mazars report on credit availability, published in December, confirmed that while some SMEs are facing significant challenges accessing credit, and the sector in general is more conservative in its borrowing, nevertheless new lending is still taking place. However, the proportion refused credit, especially in certain sectors, remains a concern for Government.
Under the NAMA legislation I will shortly be issuing guidelines to all banks participating in NAMA who lend to SMEs, to ensure that SMEs, sole traders and farm enterprises will have recourse to an independent, external review of decisions of credit refusal by the banks. The purpose of this measure is to ensure that the benefits of NAMA lead to an improved flow of credit to viable businesses. I hope that banks not participating in NAMA or covered by the Government guarantee will also decide to participate. My aim is to have a simple, effective review process, run by people with experience and credibility. The banks must comply with the recommendations of the review process, or explain why they cannot do so.
In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help me to decide what further action might be necessary to secure the flow of credit. I intend to publish the analysis from the review process so that the performance of the banks participating in NAMA will be clear to all.
Mr John Trethowan, an experienced banker with a demonstrated commitment to public and social service, is overseeing the establishment of this credit review system with initial administrative support from Enterprise Ireland. Work has been ongoing since December on the logistical aspects of the review system and it is envisaged that this will be completed shortly.
With regard to the possibility of implementing an SME loan guarantee scheme, arising from the Mazars recommendations, the Department of Enterprise, Trade and Employment undertook to have a detailed study on the proposal carried out. I understand that this report is near completion.
