Thursday, 27 June 2019

Questions (3)

Billy Kelleher


3. Deputy Billy Kelleher asked the Minister for Business, Enterprise and Innovation the number of SMEs that have been sanctioned funding and received loan funds under the €300 million SME working capital loan scheme and the future growth Brexit loan scheme. [27204/19]

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Oral answers (6 contributions) (Question to Business)

Will the Minister for Business, Enterprise and Innovation give the total number of small and medium enterprises, SMEs, that have been sanctioned funding and received loan funds under the €300 million SME working capital loan scheme and the future growth Brexit loan scheme?

The €300 million Brexit loan scheme provides relatively short-term working capital of one to three years for eligible businesses with up to 499 employees to help them to innovate, change or adapt to mitigate their Brexit challenges. Businesses can confirm their eligibility with the Strategic Banking Corporation of Ireland, SBCI, and, if deemed eligible, can apply to one of the participating finance providers for a loan under the scheme. In terms of the number of applicants for the Brexit loan scheme, the latest data available to my Department show that, at close of business on 21 June, 656 eligibility applications were received by the Strategic Banking Corporation of Ireland, of which 596 were deemed eligible by it. Of the 596 eligible applicants, 144 have progressed to sanction with their banks. The value of the sanctioned loans from banks on 21 June was €31.73 million. While data for actual funding received by applicants as of 21 June are not available, we know that there is a high conversion from sanctioned loans to drawdown, as SBCI data for the end of March indicate that 88% of the total value of loans sanctioned by banks had been drawn down by businesses.

In addition to the Brexit loan scheme, my Department, together with the Department of Agriculture, Food and the Marine and the Department of Finance and with the support of the European Investment Bank guarantee, has developed the future growth loan scheme. The scheme is making up to €300 million worth of loans available with a term of eight to ten years and is open to eligible Irish businesses, as well as the primary agriculture and seafood sectors, to support strategic long-term investment. Finance provided under the scheme is competitively priced and has favourable terms, for example, no security is required for loans up to €500,000. The scheme opened for eligibility applications on 17 April since when the SBCI has received 365 eligibility applications and issued 340 eligibility letters. With Brexit on the horizon, the availability of both the Brexit loan scheme and the future growth loan scheme means that qualifying Irish businesses will have access to low cost capital without delay. It forms part of the supports in place for Irish business to cope with potential Brexit challenges.

These are loans which must be repaid. As the Minister says, cheap capital will be available. I worry that there have only been 656 applications out of the huge total of small and medium-sized businesses. I accept that not everybody will be impacted on as directly by Brexit as others, but given the potential impact the United Kingdom leaving could have on companies, particularly if there is a hard Brexit, we must ask why only 10% of the overall funding is being made available. Is it a cumbersome programme? Is there too much red tape and bureaucracy? These issues must be analysed in advance. We now know that companies are going through an application process, but we also know that only 10% of the overall funding available has been loan sanctioned. I urge the Minister to undertake a quick review and audit of the scheme to ensure that, if it is cumbersome and there is a lot of red tape, or if businesses are discouraged from making an application in the first place, these issues will be addressed now rather than after the event.

As the Deputy knows, we have a wide range of supports in place across Departments and agencies to help businesses to prepare, but, ultimately, they have to decide for themselves whether they want or need to avail of these supports. In the case of the Brexit loan scheme, it is important to remember that it is a loan which, as the Deputy said, businesses have to pay back. Understandably, there is a natural reluctance on the part of businesses to take on debt until the full details of the Brexit challenge become clearer. It is important, however, that the loan scheme be in place in order that businesses can avail of it when needed. They should submit their applications regardless and have the loan approved in case they need to draw it down at a later stage. I engage with and meet businesses and their representative groups on a regular basis and have been getting positive feedback on the suite of supports in place. If Deputies have specific examples of companies that have been unable to access the Brexit loan scheme, I ask them to bring them to my attention in order that I can follow up on them. I have looked at the scheme and, as far as I can see, the process is transparent. I have not been made aware of any obstacle in either the process or under the scheme. However, if there is anything specific, I ask people to, please, bring it to my attention.

I do not doubt the Minister that understands this and the potential impact a no-deal or hard Brexit could have on many companies, more than anybody else, coming from a Border constituency. Anything that could assist companies, even in making applications to Enterprise Ireland and so on, should be made available to them. Banks still lack the capacity to address and understand business plans in some areas, as they are still in recovery mode. There is a potential lack of professional expertise available to companies to assist them. Therefore, every effort should be made, wherever there is red tape, bureaucracy, or a shortage of skilled personnel, to address these issues to assist companies in making a case or an application. In the context of state aid rules, up to €200,000 was made available to businesses to deal with the effects of the financial crisis. That figure was increased during the crisis, but it has subsequently come back down. Will the Minister make a formal application to the Commissioner for Competition in the European Commission on state aid rules in advance of Brexit?

I have not received any complaint about the Brexit loan scheme. I have met the heads of the three pillar banks and explained to them how important the scheme is. They are rolling it out through their own offices. Again, if there are issues with the scheme, I ask Deputies to bring them to my attention.

There is a €200,000 rescue and restructuring scheme available. I have met the Commissioner for Competition, Commissioner Vestager. My officials are in constant contact with her about the technical working group that was set up to deal with Brexit and she has said she stands ready with a rapid response team to help Ireland in whatever Brexit scenario may unfold. The Minister for Finance made it very clear in the summer economic statement that we were taking prudent decisions in the context of Brexit and that there was a need to support industry in the event that there was a hard Brexit.