Kieran O'Donnell (Limerick City, Fine Gael)

I am delighted to speak on the Bill.

Deputy Boyd Barrett made reference to public sector jobs in, for example, hospitals. I agree with what he said but we must not forget that enterprise provides the taxes to pay for public services. It is my fundamental view that we must support private enterprise. It provides jobs as well as taxes. It enables us to provide public services and to look after the less well-off and the vulnerable. People working in the public sector also contribute to the economy through their taxes.

The Bill will assist banks in providing credit to the SME sector. I agree that the banks should be lending more. They have become extremely risk averse. We have come from a situation where all bank lending to the SME sector was underpinned by property as security and there was not sufficient oversight of cash flows, business projections and project viability. Banks have now swung away from property related lending. The scheme to be established by the Bill specifically excludes property related lending, and that is good. We are getting back to the core of what the SME sector is about, which is showing a viable project.

As an accountant in my constituency of Limerick city, I worked for many years with the SME sectors. There is an old saying that cash is king. A business that does not have credit cannot survive. This is why I welcome the Bill. Based on projections, it will contribute to a gain of 1,344 jobs over the three years of the scheme, consisting of 1,020 direct jobs and 324 indirect. There will be a net Exchequer gain of more than €25 million. That is positive.

Banks have become so risk averse that marginal projects which should be getting funding are not being given it. The scheme will guarantee up to 75% of the value of a loan, it will apply to new lending and is completely geared to the SME sector.

Businesses that avail of the scheme will pay a premium to the State. It is extremely important, therefore, that banks do not put an interest loading on loans given under the scheme. Qualifying businesses should be charged the same competitive interest rate as loan applicants who are not availing of the scheme. I feel strongly about this. We must ensure that banks work within the spirit of the scheme and do not use it as a means of placing an interest loading on customers who badly need credit.

The loans given must facilitate business. We do not want to see people taking loans for too short a period. The scheme runs for three years and applicants may be anxious to have a three year loan, although repayment in such a short time might put too much pressure on the business. The scheme should provide a cushion of an initial three years after which time a business should not need to have its loan guaranteed.

It is important that the maximum possible number of banks take up the scheme. Any bank that is involved in SME lending should be encouraged to apply for the scheme so that a broad range of businesses can be catered for. Every Deputy in the House has spoken to people who have good viable businesses but, because banks have become so risk averse, cannot get loans. The scheme will guarantee up to 75% of the value of a loan over a three year period. This puts it up to the banks to deal with business people and to lend to them.

The multinational sector is extremely important to the economy. It provides in excess of 200,000 jobs and is a huge contributor to growth and employment, certainly in the Limerick and mid-west region. Equally, the SME sector is the lifeblood of the economy. The issue most often raised by those working in the sector is access to credit. The banks will now have to step up to the plate. The Government is introducing a loan guarantee scheme and it is now up to the banks to lend in a transparent and proactive manner to the SME sector.

I have been calling for a scheme such as this for a long time, even when in opposition. We must support the SME sector. On a related matter, I have always felt the self-employed should be entitled to some form of job seeker's payment. We must establish a model of fostering enterprise. Some businesses will not succeed. We must create a culture in which a person who sets up a business and fails is given the opportunity to try again. People learn much from being in business. Business owners who are forced out of business will probably not qualify for job seeker's allowance, and if they do it will be a considerable time before they receive it. Such people go through a difficult time and many of them have young families.

The Bill contains a tapestry of measures to deal with the self-employed. One of its key measures is access to credit. I welcome the Bill. It is important that the banks do not put an interest loading on qualifying businesses. People are entitled to competitive interest rates. We need to ensure the scheme is administered efficiently so that the loans come through quickly. The scheme will lead to the provision of extra jobs and the further recovery of the economy. I salute all those self-employed people who are going through difficult times. I hope this measure will ensure many of them survive and will encourage many new entrepreneurs to set up their own businesses and contribute to the economy.

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