Dáil Éireann Debate, Thursday - 28 February 2013
25. Deputy Timmy Dooley asked the Minister for Finance his views that there is a lack of competition in the banking sector here in the context of lending to small and medium enterprises; his further views on the way this can be addressed; and if he will make a statement on the matter. [10602/13]
View answerI am aware of the comments made by the Credit Reviewer in his appearance before the Joint Committee on Finance and Public Expenditure and Reform. I would accept his view that having only three main banks lending to the SME sector is not an ideal situation. The Government has taken a number of actions, particularly where SMEs have been refused credit, to improve the situation in relation to credit availability to SMEs. The Temporary Partial Credit Guarantee scheme addresses the situation where the SME is outside the risk appetite of the banks. This can arise because the SME’s lack of collateral or the banks’ lack of understanding of the business model, the market, the sector or the technology. The three main SME lenders are all participating in the Guarantee scheme.
The Microenterprise Loan Fund Scheme will provide loans of up to €25k to start-up, newly established, or growing microenterprises employing less than 10 people, who have commercially viable proposals that do not meet the conventional risk criteria applied by banks.
The funds, recently announced by the NPRF which will make €850m available for investment in Irish SME sector, should also be of assistance. In addition, the NPRF is also currently reviewing additional SME fund opportunities that would complement these funds, with the objective that the eventual suite of funds would have the capacity to invest across the full spectrum of SME financing needs.
Ultimately, it is the many actions which this Government is taking to normalise the Irish banking sector such as the cessation of the Eligible Liabilities Guarantee Scheme together with the recovery of the economy which will attract new participants to lend in the SME sector.
