Michael Lowry (Tipperary North, Independent)

I welcome the Bill and I compliment the Minister on his initiative. We are all aware of the huge pressure on businesses and enterprises across the country. Time and again, we hear of businesses being forced to close their doors as they continue to be put under pressure due to the poor domestic economy. We are faced with a litany of closed businesses and lost jobs and as the days pass, more of those businesses are being lost in rural towns and villages. The boarded up and closed shops in town centres are a sight familiar to everyone. These closures are not a reflection on the viability of the business, but rather a reflection on the impossibility of continuing to trade in this challenging environment. A key factor in this is the lack of readily available credit to assist companies in these arduous times. Any steps introduced that ease the burden on small and medium enterprises must be welcomed, and implemented as a matter of priority.

The requirement for further assistance in supplying credit to smaller businesses cannot be doubted. The need to protect, shelter and advance our domestic enterprises must be a priority. Small and medium enterprises are the backbone of our economy. The difficulty is that these businesses are floundering due to the limited availability of credit and the continued rejection of their loan applications from banks and other financial institutions. Companies may be seeking financial assistance to establish and develop the business, or they may simply require short-term credit as working capital to tide them over while they are awaiting payments. Many of these businesses find it impossible to meet the stringent requirements in place to access funds from financial institutions. I frequently meet local business people, producers and entrepreneurs who have founded and developed microenterprises which have the capability to flourish to the benefit of the entire local economy. I am told time and again that these business owners are urgently seeking access to credit from any available source, and often face a brick wall in accessing such. I am told by people from nine out of ten businesses that the greatest hurdle they face is the impossibility of accessing finance.

In its quarterly bank watch survey, ISME found that while demand remains steady at 37% of those surveyed, the refusal rate of the banks has now risen to 54%. This is a deterioration on the success rate previously recorded. Even more worrying is the statistic that 82% of businesses which applied for funding found that the banks were making it more difficult for them to access that funding.

It is clear that the market has failed adequately to provide credit to viable microenterprises and so there is a clear need for intervention at Government level. This Bill will not solve all the difficulties faced by companies, but it will go some way towards tackling this problem by providing a lifeline to start-up companies, sole traders and existing microenterprises which have faced a gruelling task in accessing finance. Restricting credit to SMEs is not only damaging to the individual company affected, but also to the overall economy. As businesses are starved of credit, they cannot invest. They are prevented from further development and growth, and in many cases their hand is forced into closing the business or downsizing considerably.

All businesses need credit to stay afloat and to increase the size of their operations. The ability of our smaller businesses to grow and develop underpins our future potential. These small businesses can, if supported, make a real impact on the community and the economy at local level. They may employ a few people locally, source supplies locally and spend money in the local economy. Additionally, they provide a significant saving to the Exchequer in terms of employment sustained and created, the removal of employees from reliance on social welfare payments, and increased direct and indirect tax payments.

I welcome this Bill as a positive step forward in helping our small businesses in these testing times. We must treasure those businesses which have the capacity to hold their own, and we must continue to bring forward legislation that seeks to assist our enterprises, ride out the storm and return to growth. Therefore, I welcome the Bill and the initiatives within it, and I hope the Bill will have a positive impact on small businesses and start-up enterprises in particular.

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