Finance Update Small and Medium Sized Enterprises 17th January 2013

17th January 2013 - Bernard Durkan TD

To ask the Minister for Finance the extent to which he has received confirmation from the lending institutions as to their ability and willingness to meet the credit requirements of the business and commercial sectors with particular reference to the small and medium sized enterprises; if he has had discussions with all the stakeholders with a view to a substantial improvement in the availability of credit and banking support for the sector at a time that output and economic recovery is vital; if he can expect a better response from such lenders in 2013 and thereby bring about a substantial economic improvement and job creation; and if he will make a statement on the matter.

– Bernard J. Durkan.

For ORAL answer on Thursday, 17th January, 2013.

Ref No: 1982/13

To ask the Minister for Finance the extent to which he has had representations from the small and medium enterprise sector in regard to the availability of credit through the banking sector; if he is satisfied that the credit stream currently available is adequate to meet the requirements of the sector throughout the course of 2013; the extent to which the lending sector acknowledges any deficiencies in this area; the action or actions proposed to address such issues; and if he will make a statement on the matter.

– Bernard J. Durkan.

* For WRITTEN answer on Thursday, 17th January, 2013.

Ref No: 2199/13

To ask the Minister for Finance the extent to which he continues to monitor the banking requirements of the business sector with particular reference to small and medium sized enterprise and the need to ensure the availability of adequate working capital or overdraft facilities; the extent to which any particular lending institutions are deemed to be recalcitrant in this regard; and if he will make a statement on the matter.

– Bernard J. Durkan.

* For WRITTEN answer on Thursday, 17th January, 2013.

Ref No: 2200/13

REPLY

Minister for Finance ( Mr Noonan) : I propose answering questions 47, 73 and 74 together.

The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. One of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme.The Economic Management Council meets the banks on a regular basis and discusses the key issues pertaining to this priority. My officials also meet regularly with key stakeholders at the forum of the SME Funding Consultation Committee.

The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have reported that they achieved their 2011 and 2012 targets.

In addition to the lending targets imposed on the banks,the pillar banks are required to submit their lending plans to the Department and the Credit Review Office (CRO) at the beginning of each year, outlining how they intend to achieve their lending targets. The banks will shortly be submitting their lending plans for 2013 to my Department. My Department, in conjunction with the CRO, will analyse the plans and meet the banks to discuss any issues of note. The banks also meet with the Department of Finance and the CRO on a quarterly basis to discuss progress. The monthly management meetings with the pillar banks also provide a forum for the issue of SME lending to be raised by the Department.

The CRO can review decisions by the pillar banks to refuse, reduce or withdraw credit facilities, including applications for restructured credit facilities, from €1,000 up to €500,000. The CRO is currently overturning 55% of the refusal decisions referred to them and anyone who has been refused credit by the banks should avail of the services of the CRO. I have received a small number of representations from individual SMEs regarding the availability of credit. I have referred some of these SMEs to the Credit Review Office which has been able to provide assistance.

I recently sanctioned the appointment of six additional reviewers in the Credit Review Office to ensure that SMEs appealing the banks’ decisions to decline credit receive a considered and timely response to their application.

The credit stream available to SMEs now includes the Microenterprise Loan scheme which will facilitate up to €40million in additional lending to microenterprises over the next five years. In addition, the Temporary Partial Credit Guarantee Scheme can facilitate up to €150m per annum of additional credit. The Scheme is designed for SME’s who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.

Last week, the National Pensions Reserve Fund (NPRF) announced investment commitments to a suite of three new long-term funds which will provide equity, credit and restructuring / recovery investment for Irish SMEs and mid-sized corporates. The NPRF is also currently reviewing additional SME fund opportunities that would complement these commitments, with the objective that the eventual suite of funds would have the capacity to invest across the full spectrum of SME financing needs.

Late last year, I published the latest independent report on the demand for credit by Small and Medium Enterprises (SMEs) on my Department’s website. This covered the period April to September 2012. This survey is the most comprehensive survey of SME Credit Demand in Ireland covering over 1,500 respondents. The contract for the survey contained an option to complete a further survey for the following six month period.

It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.

Bernard Durkan TD

Kildare North

Bernard J Durkan is the Fine Gael spokesperson on Public Expenditure, NDP Delivery and Reform. Originally from Killasser, Co Mayo,…

Finance Update Small and Medium Sized Enterprises 17th January 2013

Bernard Durkan TD

Related news

Sinn Féin reach new low exploiting Covid diagnosis in Dáil vote

Agency should be tasked with monitoring alleged price gouging by service providers – Durkan

Questions remain about National Lottery’s new 'must-win' prize game – Durkan