Dáil Éireann Debate, Thursday - 20 December 2012
98. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which efforts have been made to monitor the degree to which lending agencies have restricted or refused credit to the self–employed over the past 12 months; if difficulties the self-employed have experienced in meeting their tax liabilities have been directly linked to a gradual diminution or restriction of credit to the sector; and if he will make a statement on the matter. [57653/12]
View answerThe 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 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 and are expected to achieve their 2012 targets. The Deputy knows that SMEs include self employed people. In addition to the lending targets imposed on the banks, the pillar banks are required to submit their lending plans to the Department and the Credit Review Office (CRO) at the beginning of each year, outlining how they intend to achieve their lending targets. My Department, in conjunction with the CRO, subsequently analyses the plans and meets the banks to discuss any issues of note. The banks also meet with my Department and the CRO on a quarterly basis to discuss progress. The monthly management meetings with the pillar banks also provide a forum for the issue of SME lending to be raised by my Department.
In terms of rejection rates from banks, I would remind the Deputy that the CRO can review 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 currently overturning 55% of the refusal decisions referred to them and I would appeal to any self employed business people who have been refused credit by the banks to avail of the services of the CRO.
The banks report by sector and geographical region but do not report on the basis of the structure of the SME, whether it is a sole trader, self employed, limited company etc. The recent Red C survey shows a credit decline rate of 29% for micro enterprises which would include self employed but does note that the numbers of self employed sampled would not be statistically robust. This rate is an improvement on the two previous surveys.
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 Temporary Partial Credit Guarantee Scheme can facilitate up to €150m per annum of additional credit. This is designed for SME’s who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.
