I have ongoing contact with the main banks in relation to their lending to businesses and will, together with my colleague the Minister for Finance, and John Trethowan of the Credit Review Office, continue to ensure that they meet their lending commitments under the 2010 Recapitalisation package in terms of providing sufficient credit to the business sector. In this regard, John Trethowan recently indicated that the situation was much more positive for bank customers than it was six to nine months ago. As part of his Second Quarterly Report on SME Lending published on 18 November 2010, John Trethowan indicated that each of the banks have shown a positive attitude to the Credit Review Office appeals process, and the banks' Executives have been asked to ensure that this attitude is shared with their front-line staff.
My officials are also working with their colleagues in the Department of Finance, the Credit Review Office, Enterprise Ireland and Forfás to address access to credit issues for viable SMEs, including the option of a loan guarantee scheme to assist their working capital. It is important, however, that any new initiatives complement, rather than substitute, the main banks' lending commitments and activities under the 2010 recapitalisation package and that they would represent value for money from the taxpayer's perspective. Loan guarantees are just one of a range of possible measures being considered to address SME credit availability. Proposals for any new measures will have to be considered by Government in the first instance.
The National Recovery Plan 2011-2014 also sets out specific actions to spur further improvements in competitiveness across all sectors of the economy including measures to cut costs to business in energy, waste and transport, professional fees and property. The Plan also includes measures that will ensure that barriers to employment creation are removed.
There are specific actions which will benefit small businesses including, the review of the Business Expansion Scheme, the extension of the 15 day prompt payment rule to the wider public sector and the use of public property for incubator centres. In addition, capital investment for the Enterprise Development Agencies has been prioritised with €2.2 billion being allocated to support indigenous firms, win foreign direct investment and support research, development and innovation.
The Government has also over the last two years, introduced a number of initiatives to improve the availability of funding to the small business sector, including:
The commitment by AIB and Bank of Ireland under the 2010 Recapitalisation package of a further €20 million each for Seed Capital to be provided to Enterprise Ireland-supported ventures.
The Finance Act 2010 provided for the start-up company exemption to be extended into 2010 encouraging both entrepreneurship and economic activity.
The establishment of the Enterprise Stabilisation Fund to support viable but vulnerable exporting companies, experiencing difficulties because of the economic climate. This Fund supplies direct financial support to internationally trading enterprises by supporting their drive to reduce costs and through increased competitiveness, gain sales in overseas markets. To date, 242 projects have been approved funding of €86.2m to sustain over 10,000 jobs throughout Ireland.
The Government is also encouraging employers to create new jobs through reducing the costs associated with employment through the Employer Jobs (PRSI) Incentive Scheme. For each new eligible job, the scheme gives an 8%-10% saving on employment costs for the first year of employment. This will actively encourage the creation of new employment now when it is most needed.
All of these initiatives build on the existing range of supports and tax arrangements to encourage and sustain business activity. The services provided by the Enterprise Development Agencies are kept under review and will be adjusted to respond to the current economic situation. These Agencies continually review their activities in the light of international developments, national priorities and best practice.