Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The legislation and the Minister's speech make clear that the corporation is being established as a wholesale lender. I agree with Deputy Doherty that it would be preferable if the corporation had the capacity to lend directly to the end consumer, in this case primarily SMEs. One of the main selling points of the Bill as presented is that the corporation will be able to increase the availability of loans of greater duration with enhanced terms and potentially at a lower cost to the SME sector. Will the Minister elaborate on how the strategic banking corporation can ensure this happens? In other words, if the SBCI is providing funding to the financial institutions at a relatively low cost, how can we be sure the banks are not just going to use that as a means of increasing their net interest margin? How can we be certain an SME will be able to get a loan at a competitive interest rate, because that is the purpose of the Bill. Will the Minister elaborate on what assurances we have the terms offered to an SME by way of loan offer will be attractive?

One of the main reasons I would like to see the corporation being in a position to lend directly to SMEs is that under the system we now propose, the banks will still make the final call on any lending decision. If a bank is risk-averse - as banks are currently - there is no guarantee that even with this funding being available from the SBCI, it will be more willing to lend to the SME sector.

The fact that the corporation will not have the capacity to lend on directly is a key flaw in terms of what is proposed.

Perhaps the Minister might outline the position with regard to the mechanics of how this is going to work in practice. If a bank wishes to avail of some of the funding available, will a formal contractual agreement have to be entered into with the SBCI? Will such a bank draw down a tranche of funding from the corporation and then make it available, at its discretion, to SMEs? If the Minister could elaborate on these matters, that would be very helpful. The Minister clearly indicated earlier that the funding to be made available to SMEs by the SBCI via on-lenders would be for investment purposes. The critical issue SMEs face at present in the context of funding revolves around the availability of working capital. Businesses are trying to keep their doors open and, as we know, many of them are hanging on by their fingertips. In the short term at least, funding from the SBCI will be of no benefit in terms of the availability of working capital. Will the Minister outline his vision as to how long the corporation will be restricted to providing funding for investment purposes and on how quickly it might provide funding, particularly in the form of working capital, for the day-to-day needs of businesses?

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