Dáil Éireann Debate, Wednesday - 3 October 2012
93. Deputy John McGuinness asked the Minister for Finance if he has considered the initiative announced by the UK Business Secretary, Mr. Vince Cable, that a new business bank is to lend £1 billion to small businesses in order to ensure access to credit; and if he will make a statement on the matter. [41671/12]
View answerI am aware that the UK Business Secretary Vince Cable recently announced his intention to create a Government-backed business bank to help small and medium enterprises, with Government funding of £1 billion. This new institution brings together in one place existing Government finance support for small and mid-sized businesses. It is estimated that it will take between 18 to 24 months to actually establish this new institution and may be 2015 before it actually distributes any loans. There is also at present a lack of detail about both whether the initial government support for this initiative is a once-off provision or not and also the manner in which this new venture will seek to attract private investment. Here, as the Deputy may be aware, the Government has introduced a number of parallel initiatives to facilitate and ensure the flow of credit to viable small businesses. It announced the establishment of the Strategic Investment Fund (SIF) in September 2011. The SIF will channel commercial investment from the National Pensions Reserve Fund (NPRF) towards productive investment in the Irish economy, following appropriate legislative changes to the investment policy of the NPRF. As well as money from the NPRF, the SIF will seek matching commercial investment from private investors and target investment in areas of strategic significance to the future of the Irish economy.
The Strategic Investment Fund will comprise a series of sub-funds, targeted at commercial investment in critical areas of the Irish economy including infrastructure, venture capital and provision of long-term capital for SMEs. The NPRF will take a lead role in the development and implementation of each sub-fund.
As the Deputy is aware, the Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending, including lending for working capital purposes, of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their 2011 targets.
The independent Credit Review Office (CRO), as part of its remit, monitors the banks’ progress in relation to the targets and reports on a quarterly basis in this regard. Mr. Trethowan’s next report is due to be published shortly.
The CRO also reviews decisions by the pillar banks to refuse, reduce or withdraw credit facilities (including applications for restructured credit facilities) from €1,000 up to €500,000. The CRO is overturning 55% of the refusals referred to them. I would appeal to SMEs who have been refused credit by banks to avail of the services of the CRO.
The Deputy should be aware that the Microenterprise Loan Fund Act provides for a scheme which will facilitate up to €40million in additional lending to microenterprises over the next five years. Furthermore, the Government is in the process of facilitating up to €150m per annum of additional credit through the Temporary Partial Credit Guarantee Scheme, designed for SMEs who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
