Dáil Éireann Debate, Tuesday - 16 April 2013
203. Deputy Tom Fleming asked the Minister for Finance if he is satisfied that the banks are making adequate credit available to small and medium sized businesses; and if he will make a statement on the matter. [16749/13]
View answerThe Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. One of the key priorities of the Programme for Government is to ensure an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme. The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. The Credit Reviewer, Mr John Trethowan, said in his most recent quarterly report that "both banks have achieved their €3.5bn SME loan sanction targets" and that "over €8bn was sanctioned in 2012; of which approx. €2.5bn (27%) is new lending drawn down". According to the Credit Review Office, the balance of the sanctioned lending represented restructured or refinanced credit to SMEs. The Credit Review Office in the past has noted that this is important in terms of sustaining the businesses and the associated jobs.
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. The banks have submitted their lending plans for 2013 to my Department. My Department, in conjunction with the CRO, has analysed the plans and has met the banks to discuss them. The banks also meet the Department of Finance 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 the Department. My officials and I will engage robustly with the banks to ensure they meet their 2013 targets. It is important to note that the targets for 2013 represent an increase of 33% over the 2011 targets. My Department’s review of 2012 is available at www.finance.gov.ie/viewdoc.asp?DocID=7609&CatID=45&StartDate=01+January+2013. It contains details of some of the actions taken in 2012 including demand surveys, ongoing consultation with the SME sector, initiatives with the banks, the Credit Review Office review and increase of its resources and NPRF funds for the SME sector. Another demand survey is currently being conducted by Red C on behalf of the Department.
Access to Finance for SMEs is a key aspect of the Action Plan for Jobs 2013. It is the Government’s vision that all viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. The SME State Bodies Group was established in 2012 to both develop key policy initiatives to support SME access to credit and other forms of finance, and to ensure their implementation. It will continue in 2013 to engage intensively in proactively addressing issues associated with SME funding and financing in conjunction with the relevant stakeholders through the SME Funding Consultation Committee. My officials also meet frequently with additional stakeholders who wish to contribute to policy development in relation to access to finance.
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. One of the most powerful ways of ensuring the pillar banks provide credit to viable SMEs is through access to the Credit Review process. I would strongly advise anyone who has been refused credit to avail of the services of the Credit Review Office.
