Batt O'Keeffe (Cork North West, Fianna Fail)

The provision of credit to our enterprise sector, especially SMEs, should primarily come from a properly functioning banking sector and any additional initiative on the State's part should not relieve the banks from their obligations in this regard.

However, the Deputy will be aware that my officials are 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 the working capital requirements of SMEs. The most recent meeting was held on Monday last, 11 October. A range of issues relating to SME credit were discussed and follow up action is under way.

These meetings are aimed at building on the already substantial progress that has been made in identifying the critical elements for further initiatives. It is important that any new initiatives complement, rather than substitute, the main banks' lending commitments and activities under the recapitalisation package and that they would represent value for money from the taxpayer's perspective.

The Deputy's question refers specifically to criteria to be used in any new scheme. While the specific issues are still under discussion, it is possible that a new initiative would only apply to commercially viable businesses that, despite having demonstrated the ability to repay, were unable to secure lending facilities due to known market failures. An example of such a failure would be lack of information concerning certain business sectors, certain types of business models and many foreign markets.

While the Deputy's question focuses on loan guarantees, this is just one of a range of possible measures being considered to address SME credit availability. Proposals for any new measures will be considered by Government in the first instance

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