Dáil Éireann Debate, Thursday - 10 October 2013
1. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the way the operation of the microfinance fund will be improved to ensure a greater level of successful take-up of the scheme; if he expects it to reach its targets for provision of funding; and if he will make a statement on the matter. [42818/13]
Amharc ar fhreagraI thank Deputy Calleary for raising this important issue. Microfinance Ireland, MFI, began operations in October 2012. It is the first time such a scheme has been put in place in Ireland. By its nature, the scheme is demand driven. To date there have been 295 applications and 107 approvals for a sum of €1.62 million. Some 237 jobs are estimated to have been supported through the scheme. We had hoped at the outset that there would be 500 applicants and a drawdown of €8.8 million. We all have the same objective of making people more aware of the scheme and its benefits.
A key challenge for MFI is to ensure people are aware there is support for new and existing viable microenterprises with perceived or real higher trading risk and which have been refused credit by banks. The modification that banks no longer have to refuse applications is welcome. I am glad to announce that change as banks were taking too long to make decisions. We have received clarification that a general indicative approach from the bank is sufficient ground on which to make an application. That will accelerate applications considerably, which is good news. An information pack will be delivered to all Deputies over the coming week with details of the revised website and new structures to promote this end. There are ongoing promotional and awareness activities to ensure awareness of the scheme is promoted to its full potential among relevant microbusiness groups across all sectors of business.
National and local radio advertising continued throughout the period of January to June 2013. During this period, two main bursts of advertising were commissioned to support both national and local audience reach, including Newstalk, an RTE prime time listenership radio package and 21 local radio stations. MFI has also undertaken a number of other publicity and awareness raising activities, including targeted media releases resulting in coverage in various newspapers, access to finance seminars, breakfast briefings, etc. It is doing its utmost to promote the scheme. Banks were taking too long to give a refusal because there was a requirement for a certification letter. As the main news today is that that is no longer necessary, it will be more effective than any campaign.
I thank Minister of State, Deputy Perry and welcome the Minister, Deputy Bruton, back from his temporary leave of absence. I hope this gig goes better than that one did.
I welcome the change outlined by the Minister of State which needs to be shouted from the rooftops to applicants under the microfinance scheme. I still have queries about the pricing of the scheme. The interest rates are still very expensive, among other issues. The most recent ISME survey to which 1,026 owner-managers responded indicated the average decision time on lending had expanded from four to five weeks. I realise the survey was carried out over the summer period, but both Ministers know there are serious delays in bank decision-making. The overall issue of SME finance is still very important. I have tried on several occasions to get answers to a number of questions which keep being passed up the line to the Department of Finance. Concerning really good SMEs which are trading well but which, because of property issues which arose back in the so-called boom times, are experiencing difficulties, has the Department engaged with the banks in terms of perhaps offering a business version of the split mortgage that would allow businesses to rest that debt, continue to trade and be in a position to service the debt in a number of years?
What kind of engagement has the Minister of State had around that idea or what kind of proposals has he made to the banks for viable day-to-day businesses that are under huge pressure due to property investments? If they can be released from that pressure, they can grow their business and employment and be able to service that debt at some stage in the future.
In respect of microfinance, there will be a major event entitled Taking Care of Business in Dublin on 23 October. Other measures include the midlands think tank awareness and local enterprise offices which will be a real vehicle for pushing the 25,000 applications. The County Enterprise Boards (Dissolution) Bill is going through Seanad Éireann.
In respect of Deputy Calleary's question about the banks, they are very much domestic banks and the Government has ring-fenced €8 billion for the indigenous business population. It is advised that people make applications. Banks have given a significant commitment to the Government and are looking very seriously at where jobs are attached because the 200,000 companies employing 700,000 people are the backbone of the economy. The purpose of government is business. Without doubt, the banks need viable companies. Where people are making a real-time application, where proper due diligence is done on the merits of a business and where they can separate, the banks are quite supportive of that application. The head of the Credit Review Office, John Trethowen, has recommended that the limits on the threshold for appeals by small businesses to the office be extended. The budget will be very much based on business and entrepreneurial activity in the economy but, equally, the support of companies who find themselves with a massive property portfolio and where the viability of the business is questionable. Both of the two banks that are sponsored by the State to a large degree are very much engaging with businesspeople and where people have been refused, there is the code of conduct for banking which has been revised. People can appeal a decision within 21 days. I expect that the recommendation to the Government by Mr. Trethowen that the new limits for appeals to the Credit Review Office be extended from €500,000 to €3 million will be approved. If approved, it will certainly open the facility for businesspeople to fall into a group from which they were previously excluded.
In respect of the credit guarantee and microfinance schemes, this is the time of year when the self-assessment deadline is due. I would encourage Microfinance Ireland to use that database as Revenue is communicating with all self-assessed people to promote the scheme.
We really need to become serious about the Department pushing the Department of Finance to push the banks about some sort of viable product for splitting viable businesses from overhanging debt and property-rated loans that these businesses will service in time. At least, it will give them the break to expand their businesses and employment. I would like to see the Minister of State's Department put pressure on the Department of Finance and for it to be the champion of some model like that. We are offering domestic mortgage holders a range of solutions but this is something that would be directly relevant to many really good businesses if they could move away from their debt - not abandoning it but paying it in time - and to release their capital and energy to grow their business and employment.
I assure the Deputy that the Minister is actively working with the Minister for Finance with regard to the potential for the business sector. We recognise fully that the potential of Ireland lies in its 200,000 small businesses. The banks have very much obliged to support viable companies. We have had excellent facilitation from the Credit Review Office, which has been very successful in a number of applications that had been refused by the bank. There is a better understanding where there would be risk of collateral security and the banks are very much obliged to take on board the guarantee given by the State. The most important micro is the microfinance fund. Microfinance Ireland assured me today that all Deputies will have a new promotional pack that they could leave in their offices so that people can see it when they come to them about microfinance, the personal loan guarantee and the rest of the suite of opportunities and engage directly with the banks because many people do not go through the appeal process. We want to ensure that they do and benchmark the 21 days after which the bank is duty bound to come back with a decision.
