Michael McGrath (Cork South Central, Fianna Fail)
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Question 14: To ask the Minister for Finance if he is concerned by the latest Bank Watch survey from the Irish Small and Medium Enterprises Association, ISME, which indicated that while demand for credit remains strong, a high level of refusal of credit is hampering the recovery of the economy; and if he will make a statement on the matter. [14826/12]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy is aware, the Government has imposed lending targets on the two domestic pillar banks for the three calendar years 2011 to 2013. Both banks were 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. I can confirm to the Deputy that both banks have achieved their 2011 targets. I should stress that the targets are for approvals of credit and have not been imposed for drawdowns. I would point out that the drawdown of funding is at the discretion of the borrower. There are many factors affecting whether or not funding is drawn down, such as changes in market conditions or company restructuring.

The recent Mazars Survey of SME Lending, conducted on behalf of my Department, found that, in the period April-September 2011, 36% of SMEs surveyed requested bank credit. Excluding pending applications, 70% of these applications were approved or partially approved.

The ISME Quarterly Bank Watch Survey, which was published earlier this week, has a base of 904 respondents but the means of conducting the survey is not explained. It is understood that the survey is internet based, which has obvious difficulties with self-selection of people who have specific complaints, leading to potential bias in the survey. As I mentioned previously, the lending targets for the pillar banks are for loan approvals not drawdowns. ISMEs own figures show that only 66% of firms who were approved for credit have drawn it down either in full or in part. The most frequent reasons cited in the Mazars survey for not availing of approved credit continues to be 'not needed at present time', which was cited by 80% of respondents.

I would urge people with viable propositions who are refused credit to go to the CRO and not to let anything discourage them from doing so. The CRO overturns 50% of bank refusals and provides a user-friendly service to borrowers.