Heather Humphreys (Cavan-Monaghan, Fine Gael)

I welcome the opportunity to speak on this Bill. I commend the Minister, Deputy Bruton, on bringing forward this important legislation. I have worked in the financial services industry for many years and one story has always stuck in my mind, and it is appropriate that I share it with the Minister in the context of this Bill. I once interviewed a married couple who were seeking a small loan to carry out some renovations to their home. The application was assessed and the loan approved. The wife was delighted because she could fix up the house and make it more comfortable. The husband was somewhat more hesitant. I asked him what was wrong and his reply was: "The banks - They give you an umbrella when the sun is shining, but when the rain comes they take it away." The umbrellas are well and truly gone now. This simple story paints an accurate picture of what has happened in Ireland. At the height of the boom, when the sun was shining, banks lent recklessly, but now when the rain has started and people have fallen on hard times, the umbrella has been taken away.

In the Celtic tiger years, asset based lending became the norm. The focus moved away from repayment capacity and now we are paying the price. I believe that by introducing the microenterprise loan fund scheme, the Government is providing businesses with much needed financial assistance. The most positive aspect of the scheme is that it will enable entrepreneurs with ideas to access the credit that they require to get their idea up and running. It is hugely important that the Government does its utmost to support small business as they are the lifeblood of our economy. My county, Monaghan, is renowned for its entrepreneurial spirit and the majority of our employment is related to indigenous businesses. The Minister had an opportunity to see this first hand when he visited Monaghan last month and met with a number of local business organisations.

One of the biggest reasons for start-up business failure is poor financial management. People can produce excellent products, but they also need to have the business know-how to manage their finances correctly. If this does not happen, then, unfortunately, regardless of how good the product is, it is inevitable that the business will struggle. The microenterprise loan fund will provide some businesses with the chance that they have been waiting for, but these businesses must ensure that this opportunity is not wasted through poor financial management. I would encourage businesses to use their local county enterprise boards and local enterprise officers who are available to give excellent guidance and assistance. This scheme forms a further part of the Government's plans to get credit flowing to businesses again and will complement other initiatives, such as the credit guarantee scheme and the development capital scheme.

Retaining and creating jobs remains the top priority for Government. There is no doubt that by supporting our small businesses and creating an environment in which they can flourish will in turn have a positive impact on job creation. There are businesses that need access to credit in order to survive, but likewise there are businesses that have diversified and which are turning this recession into a positive by identifying new opportunities. These would be in a position to expand and create jobs if they were provided with the necessary finances. Figures issued today show 2011 as providing a record result for exporters, with over €15.2 billion of exports out of Ireland. The main growth area in exports is with small and medium enterprises, which this fund specifically targets.

It is worth pointing out that research from the Central Bank has identified Ireland as the most difficult country in the eurozone for small businesses to access credit. We have all been told by our constituents that the banks are simply not lending. Part of the reason for this can be attributed to the fact that they do not have the skills to assess or understand the business propositions that are presented to them. The problem is that when a person with a credible business idea is refused a loan, this can have a very negative impact on his or her confidence. The person may lose hope and instead of creating what could have been a successful business employing others, the likelihood is that he or she will give up all together. The other danger is that if people repeatedly hear that the banks will not lend, they will not even attempt to get their project off the ground. That is the reason schemes such as the micro-enterprise loan fund are vital at this point in time, so that entrepreneurs are encouraged and supported. I reiterate my support for the Bill and commend the Minister for his ongoing efforts in attempting to create a more favourable environment within which small business can operate.

See this speech in context