John Perry (Sligo-North Leitrim, Fine Gael)

The availability of credit to viable businesses is a recurring challenge that has hampered new or expanding firms from developing new products and markets, and thereby protecting or creating jobs. This is a challenge the Government is determined to address.

With my departmental officials, I continue to work closely with our colleagues in the Department of Finance to ensure that the interests of businesses are central to Government actions in the banking sector. The recently announced plans by my colleague, the Minister for Finance, to restructure and recapitalise the banking system is the principal response to this challenge. These plans are designed to secure an adequate flow of credit into the economy to support economic recovery, even as the banking system is down-sized.

As the Minister for Finance has confirmed, the banking system restructuring plan creates capacity for the two pillar banks, Bank of Ireland and AIB, to provide lending in excess of €30 billion in the next three years. SME and new mortgage lending for these banks is expected to be in the range of €16 billion to €20 billion over this period.

In each bank, a team of senior managers will be dedicated to the task of ensuring that lending continues to grow to support economic growth. This lending capacity is incorporated into the banks' de-leveraging plans which allow for the repayment of Central Bank funding through asset run-off and disposals over the period to 2013.

Both pillar banks regularly provide the Department of Finance with monthly figures on balance-sheet volumes, sanctioned facilities, and geographic and industrial breakdowns of their SME lending, and for sanctions and drawdowns by SMEs. The data is monitored to ensure that the banks are compliant with the terms of the Government recapitalisation as it relates to the provision of credit for SMEs.

As part of the jobs initiative and in accordance with the commitment in the programme for Government, I am working towards the introduction of a targeted, temporary partial credit guarantee scheme, which will be in operation later in the year. Work is also under way on the establishment of a microfinance fund to provide loans of up to €25,000 to micro-enterprises employing up to ten persons for start-ups and expansions.

Businesses having difficulty with credit refusals can use the services of the Credit Review Office. With effect from 9 July, the limit for loan applications that can be reviewed by the Credit Review Office has been increased from €250,000 to €500,000.

Additional information not provided on the floor of the House.

As a further assistance to improving the cash flow of businesses, all Government bodies - excluding commercial semi-State bodies - are now required from 1 July 2011, to pay suppliers within 15 days of receipt of a valid invoice. Given that the public sector enters contracts with suppliers worth €15 billion each year, the importance of such a policy for all the companies that do business with the State is clear. These actions already taken will enable businesses to access credit and benefit from growth in our economic activity. I am committed to the provision of an adequate supply of credit to viable businesses and I will continue to ensure that our heavily supported banking system plays its role in supporting our enterprise sector.

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