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

As I outlined to the House on several occasions in recent months, most recently on 2 December 2010 in reply to Question No. 98, 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.

Since my last reply, the working group has received updated analysis from Forfás and Enterprise Ireland to allow greatest possible targeting of any initiative on viable, innovative and growth-orientated SMEs who face a specific market failure, namely, where institutions have difficulty in applying existing credit policies and products. This can be, for example, due to lack of familiarity with certain sectors, markets and business models. Substantial progress has been made in identifying the critical elements involved in any further initiatives. However, in developing any further initiatives, it is important they complement, rather than substitute, the main banks' lending commitments and activities under the 2010 recapitalisation package, and that they represent value for money for the taxpayer.

The provision of credit to our enterprise sector, particularly SME's, should primarily come from a properly functioning banking sector and any additional initiatives on the State's part should not relieve the banks of their obligations in this regard. As indicated already, loan guarantees are just one of a range of possible measures being considered to address SME credit availability. Proposals in regard to any new measures will have to be considered by Government in the first instance.

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