Dáil Éireann Debate, Thursday - 8 December 2016
10. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation her views on the current drawdown levels issued under the credit guarantee scheme, including the total value of approvals on the same dates and a county breakdown of each drawdown and approval; and if she will make a statement on the matter. [39111/16]
View answerWhat are the Minister's views on the current drawdown levels issued under the credit guarantee scheme, including the total value of approvals on the same dates and a county breakdown of each drawdown and approval?
I am taking this question on behalf of the Minister of State, Deputy Breen, who is delayed in Brussels. On 3 November 2016, the Minister of State provided the Deputy with the most recently available breakdown of the value of approvals by county as at 21 October 2012, as given to the Minister of State by the new operator of those schemes effective from 17 October 2016 - the Strategic Banking Corporation of Ireland, SBCI. Since then, the Minister of State has received the third quarterly report for 2016 for the period July to September 2016 and published this report on the website of the Department. If the Deputy does not have the report, I will make sure he gets it. The SBCI has advised that the total value of loans approved under the schemes since its inception in October 2012 exceeds €60 million. The actual drawdown of these facilities in the same period is approximately €17 million. However, it is not possible to provide a breakdown of drawdowns by county for data protection and confidentiality reasons.
A loan under a credit guarantee scheme is one with a higher degree of risk because the SME in question has already tried and failed to get a bank loan before applying under the scheme. Once a loan is approved, it is entirely a commercial matter for the SME to decide whether or not the loan will be drawn down in whole or part. While the benefit of a guarantee is offered to a borrower under the scheme, some borrowers do not proceed.
Recognising that deficiencies in the original schemes and legislation were impeding use of the novel approach of credit guarantees, the Government decided on a process of review and reform and an amendment Act was subsequently adopted in February 2016 increasing the level of risk taken by the State, extending the definition of lender and loans to cover sources of finance other than banks, involving the SBCI in this area and enabling the SBCI and the Minister of State to work together to unlock EU funding sources for our SMEs. Work is currently being finalised on the new credit guarantee scheme and on the introduction through the SBCI of new risk sharing counter guarantee products. These will ensure that the future schemes are more fully aligned to the needs of business and will lead to an increased take-up of approvals.
Additional information not given on the floor of the House
The Government remains committed to ensuring that our SMEs have access to appropriate finance for their business needs, which will ensure that they continue to grow and develop. The credit guarantee schemes and the new counter guarantees are a central element of those supports which, when combined with other Government initiatives such as Microfinance Ireland, the SBCI, the Credit Review Office and the prompt payment code, should enable companies to expand, service new markets and grow employment.
The Minister and Minister of State will be aware that in the context of the many discussions we have had about Brexit, the credit guarantee scheme is a significant part of the model our SMEs need to allow them to compete on an international basis bearing in mind that we are largely an exporting economy. The figures for approvals I have here show a concentration in Dublin and the greater Dublin area of Kildare, Meath and Wicklow. Naturally, some of that is down to the concentration of population, business and trade around the capital. In terms of trying to address the imbalance of regional development we are experiencing, we know that the country is lagging behind the city and waiting for the spillover effect from Dublin is a long wait for a lot of people and communities. Bearing in mind what ICTU, ISME, IBEC and the Irish Exporters Association are saying about the challenges Brexit poses for our businesses in exporting to the UK and trying to diversify into other markets to lessen the impact of Brexit, when can we expect the new scheme mentioned by the Minister of State to become available to businesses? What kind of timeframe are we talking about? Are we looking at greater levels of cover which businesses can avail of?
I accept that the take up of the scheme outside Dublin is comparatively low and this is being looked at. It is consistently asked why the figure of €17 million is so low compared to the credit guarantee scheme-sanctioned figure of €61 million. I do not know if a breakdown of the approval of loans and distribution by county and the reason why many people outside Dublin do not take up the scheme has been given to the Deputy but if not, it should have been. While guarantee-backed loans approved under the scheme are easily quantifiable, for some reason, some SMEs, and there seems to be higher proportion outside Dublin, make the commercial decision not to take up the scheme. I do not know the reason for this. It should also be noted that negotiations between the Department and the Department of Finance are ongoing and there is a recognition that there is some fault in the scheme. There is no question about that. The objective of the scheme was that there would be parity across the country in respect of take up . I am told that in a number of months, an initiative should be put in place. It will take a bit of time. The scheme will probably be brought to the Dáil and Members will be able to put further questions regarding the current scheme if they feel there are deficiencies in it and how the next scheme could be put in place.
