Dáil Éireann Debate, Thursday - 26 April 2012
30 Deputy Bernard J. Durkan asked the Minister for Jobs, Enterprise and Innovation the extent to which it has been found possible for Irish firms to avail of start up or recovery support in terms of capital borrowing requirements or working capital; if it has been possible to address such issues in respect of small and medium enterprises of an indigenous nature; and if he will make a statement on the matter. [20859/12]
Amharc ar fhreagraThe issue of access to credit is critical to support economic growth and encourage start-ups and entrepreneurship. It is explicitly addressed in the Action Plan for Jobs in the context of the introduction of a Micro-enterprise Loan Fund, which has a significant entrepreneurship focus, the Temporary Partial Credit Guarantee Scheme, and in the range of actions listed to encourage and measure new bank lending.
The Microfinance Loan Fund will provide small loans of up to €25,000 to start-up, newly established, and existing Microenterprises with under 10 employees, across all industry sectors. The Government are allocating €10 million as seed capital for the Fund. It is anticipated that the Fund will supplement this seed capital by leveraging further funding from private sources, including the banks. The €10m allocation, supplemented by a further €15m raised from private sources over the short to medium term, should generate €40m or so in increased lending to microenterprises, creating up to 4,000 jobs over a 5 year period. This is based on an estimated €9 million of loan demand annually. Extrapolating further, the same model should generate between €90m-€100m in additional lending, finance 5,500 microenterprise loans and generate some 8,000 jobs over a 10 year period.
The Temporary Partial Credit Guarantee Scheme will facilitate up to €150m of additional lending per annum to micro, small and medium enterprises who are on the margins of commercial lending decisions. This Scheme will provide a 75% guarantee to banks against losses on qualifying loans to both start-ups and existing businesses. The Scheme will facilitate new lending, encourage investment and company growth (scaling), save jobs and facilitate the creation of new jobs, and will boost trade. The benefits forecast to arise from this intervention in each year of operation, on the basis of each tranche of €150m of additional lending to SMEs, include:
Over 1,300 jobs created;
Over €25m of exchequer benefits in tax revenues and welfare cost savings.
These interventions will benefit enterprises by enabling them to access credit that they would not otherwise obtain, for various purposes such as improving cashflow, developing new products and markets, and job creation. The Government's commitment to improve the financing environment and the key actions we are delivering under the Action Plan for Jobs will create new jobs, sustain existing jobs, and create economic opportunities for both new and existing businesses.
These targeted measures supplement the initiatives already taken by the Minister for Finance to restructure, re-capitalise, reorganise and deleverage the banking system to ensure a properly functioning banking system and stimulate an adequate flow of credit into the economy, thereby supporting economic growth for all business including indigenous SMEs.
These Government initiatives are being implemented as a priority to ensure a properly functioning banking system and stimulate an adequate flow of credit into the economy, thereby supporting economic growth for all business including indigenous SMEs.
