Dáil Éireann Debate, Tuesday - 9 April 2024
328. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which working capital is being provided by the various lending institutions for the farming and business sectors, with particular reference to the need to ensure the ability of productive sectors to have ready access to competitively priced credit; and if he will make a statement on the matter. [15416/24]
View answerSmall and medium-sized enterprises (SMEs) play a significant role in the Irish economy, representing 99.8% of the total enterprise population in 2021. Additionally, they contributed to 69.2% of the total persons employed in 2021. Their key role in Ireland's economy is why my Department conducts the SME Credit Demand Survey and has been doing so biannually since 2011.
The SME Credit Demand survey is a report of great importance, as it offers valuable insights into the credit availability and demand among SMEs, along with other related issues. This independent and statistically significant survey provides a comprehensive understanding of the credit landscape for SMES.
As the Deputy is aware, the latest SME Credit Demand Survey was published on 27 January 2023 and the full report is available online. Key results include that demand for bank credit has fallen steadily since the series commenced, with requests in the period falling from 39% of those surveyed in September 2012 to 17% in the most recent result (6 months to September 2022).
However, the recent growth in non-bank finance activity as a source of credit for SMEs is a contributing factor. The 5% of SMEs who stated they applied for non-bank finance in the 6 months to September 2022 is notable and reflects a growing market share for this source of finance, with further expected future demand.
The Deputy will be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers and the decisions made by individual lending institutions at any particular time, which are taken by the board and management of the relevant institution. This includes decisions in relation to products and lending. However, there are a number of Government-backed initiatives that have been introduced to assist SMEs and farmers with access to credit.
In relation to those businesses refused credit, the Credit Review was established to assist SMEs and farm borrowers that have had credit applications of up to €3 million refused or an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the banks' internal appeals process.
Two loan guarantee schemes for SMEs were announced in Budget 2023; the Ukraine Credit Guarantee Scheme and the Growth and Sustainability Loan Scheme. These aim to facilitate access to credit at competitive prices in these areas important to SMEs and Government, namely challenges arising from invasion of Ukraine by Russia, growing businesses and investing in sustainability. These credit guarantee schemes are being delivered through the Strategic Banking Corporation of Ireland.
The Ukraine Credit Guarantee Scheme opened for applications on 20 March 2023. This €1.2 billion scheme provides low cost funding to qualifying SMEs, including farmers and fishers and small Mid-Caps affected by the rising costs of carrying out business, resulting from the invasion of Ukraine by Russia. By the end of March 2024, 3,007 loans were approved to the value of €278.7 million; with €238.3 million of this amount drawn down to date.
The Growth and Sustainability Loan Scheme launched on 19 September 2023. This scheme for SMEs, including primary producers and small Mid-Caps, makes €500 million in loan funding available to enable investment in growth and sustainability. A total of 30% of the lending volume under the scheme is reserved for investment in sustainability and energy efficiency. These green loans also attract a special discount interest rate. An amount of 391 applications were approved by the end of March 2024 to the value of €62.8 million, with €32.8 million of this amount drawn down to date.
