Tuesday, 18 October 2016

Questions (203)

Michael McGrath

Question:

203. Deputy Michael McGrath asked the Minister for Finance his plans to introduce for SMEs generally a loan scheme similar to the €150 million loan fund for the agri-sector announced as part of budget 2017; the reasons for his position; and if he will make a statement on the matter. [30885/16]

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Written answers (Question to Finance)

The Cash Flow Support Fund for Farmers is a specific, time bound, initiative that has been made available to the agrisector because of market difficulties currently being experienced and to preserve the growth potential of this sector.

It is supported by €11 million of EU Exceptional Adjustment Aid and further funding from the Department of Agriculture, Food and the Marine, under a derogation from state aid regulations that ordinarily apply to the agriculture sector. This measure will enable farmers to improve the management of their cash flow and reduce the cost of their short-term borrowings so they can continue to trade during the current period of commodity price volatility.

The government is committed to supporting the wider financing needs of SMEs, in all sectors of the economy, and ensuring that there is an adequate supply of affordable and appropriate credit to meet their needs. The Strategic Banking Corporation of Ireland (SBCI) was established to increase the availability of credit to SMEs at a lower cost and on more flexible terms. In this regard, it is encouraging to note that to the end of June 2016, the SBCI has lent €347 million to 8,619 SMEs. On average, the SBCI provides a discount of circa 1.5% on the market interest rate to SMEs.

The SBCI continues to have significant lending capacity; it has funding agreements in place with the European Investment Bank, KfW and the NTMA and has a current funding capacity of over €1 billion to enable it to make low cost loans available to SMEs across all qualifying sectors.

The most recent Department of Finance SME Credit Demand Survey sought the reasons why businesses did not seek credit and the results showed that 84% of respondents who had not applied for credit stated that they did not seek credit because they did not need it. Only a very small minority of respondents, 1%, stated that they did not seek credit because it was too expensive.

The deputy should note that this particular agriculture measure is only possible due to emergency EU funding and it relates to issues that are specific to the agri-sector at present. Given the Government measures already in place to support the wider provision of low cost financing to SMEs and the specific EU assistance available for this agriculture support, there are no plans currently to extend a similar loan scheme to SMEs generally.