Dáil Éireann Debate, Tuesday - 21 May 2024
240. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which working capital continues to be made available to the farming and business sectors, with particular reference to smaller enterprises; and if he will make a statement on the matter. [22990/24]
View answerAs the Deputy is aware, supporting SMEs and farm borrowers has been a cornerstone policy for Government. It is important that all viable SMEs have access to an adequate amount of credit from various sources. To support SMEs in this regard, the Government has implemented several initiatives to enhance the availability of credit.
In terms of monitoring the working capital requirements for SMEs, my Department commissions annual surveys to ascertain the demand for credit by SMEs. I would draw the Deputy's attention to the most recently published Department of Finance SME Credit Demand Survey, covering the period January to December 2023, which can be found at www.finance.gov.ie.
The results of this survey show that, when pending applications are excluded, 89% of credit applications to banks were approved or partially approved. Working capital/cash flow requirements are provided as the main reason for applying for bank finance with 36% stating this is why they requested bank finance. Expansion requirements were provided as the second highest reason for applying for bank finance with 31% of respondents stating that they required finance for this purpose.
The main reason given for not seeking finance was that that the business had sufficient internal funds (76%). The survey also showed that profitability is up for all company sizes, with medium sized companies reporting the best profit performance. 80% of the medium sized companies reported a profit, up from 76% in the previous wave. Among small sized companies, 75% reported a profit, while 70% of micro companies reported a profit for 2023.
The provision of working capital to the farming and business sectors is a matter for banks and other private lenders in the market. However Government has in place certain measures to enable and support this provision.
The Credit Review Office is available to support SMEs who have had an application for credit of up to €3 million declined or reduced by the participating Irish banks, and who feel that they have a viable business proposition. This is a strictly confidential process between the business, the Credit Review Office and the bank. The Credit Review also operates an informal “Help Line” service where the Reviewers engage directly with SMEs and farmers who have credit/banking related issues, providing information and updates.
The Strategic Banking Corporation of Ireland, a body under the aegis of my Department, has a key role to play in providing low-cost, flexible, State-backed loans to SMEs, improving their ability to access finance. The SBCI channels its funds through lending partners known as on-lenders, which include banks, credit unions and other entities.
The SBCI’s Ukraine Credit Guarantee Scheme provides low cost finance to fund working capital for SMEs, farmers and fishers affected by the economic consequences of the conflict in Ukraine. These loans can range from €10,000 to €1,000,000, repayable over up to six years, and loans of up to €250,000 do not require a personal guarantee nor collateral.
The Growth and Sustainability Loan Scheme is aimed at supporting SMEs and farmers to grow their businesses and make them more resilient and environmentally sustainable.
Other Government Departments continue to deliver a range of supports to the farming and business communities. In particular, I would like to note that Government has decided to increase the maximum permissible value, from €25,000 to €50,000, for loans from Microfinance Ireland, which lends to businesses that cannot obtain loans from other commercial lenders,
I can assure the Deputy that my Department, working with other relevant Departments and bodies, will continue to advance policies to support Irish SMEs, including farmers, to have sufficient access to finance.
