Matt Shanahan (Waterford, Independent) | Oireachtas source

I welcome this Bill, which proposes to allow the Ministers for Enterprise, Trade and Employment and Agriculture, Food and the Marine to enter into agreements with the Strategic Banking Corporation of Ireland to implement a loan guarantee scheme for small and medium enterprises, including many of our primary producers.

The financial gearing of this scheme could deliver up to €330 million in available lending at an Exchequer cost of €29 million. Primary lenders may access the funding with an 80% loan guarantee from the State. It is proposed that the interest rates shall be fixed at 4%, with many parties being offered repayment plans of up to six years. Covid-19 and Brexit have created significant difficulties for many businesses and sectors, affecting both supply and demand curves, especially for domestic and exporting small and medium enterprises and primary producers.

This proposed funding underlines the importance of the SME community to the Irish economy. These SMEs account for 67.5% of Ireland's overall employment, contributing 37.3% of gross value added to the economy. It is very important that this money gets out to the SME space as soon as possible and I welcome the urgency attached to this by the Government.

I remind the Minister of State of previous such initiatives, including an 80-20 loan guarantee, when pillar banks demonstrated great resistance to taking up the 20% proportion of loans, or underwriting loan requests.

We need to remind the banking sector of the facilitation the Irish State and people provided over the past decade in returning those pillar banks to solvency. Their efforts are underwriting the generous salaries, particularly at executive levels, that staff at these banks enjoy. I hope Departments will apply sufficient pressure to ensure there is significant uptake and underwriting of these loans.

The credit union sector has a significant part to play in providing SBCI-backed finance. It is imperative that the number of approved credit unions that distribute this funding continues to rise. Understanding that the banking landscape is shrinking, I urge the credit union sector to consolidate and collaborate on these lending opportunities and the potential for the sector to play a greater part in providing financial support for our SMEs and indigenous businesses. As the economy opens up and some of the current business and wage supports begin to reduce, a clearer picture will emerge for many businesses of the viability of their operations and the sustainability of their business activities. Many enterprises have had to begin a journey of critical self-analysis. Many have been forced to look again at how they are doing their business but, in truth, none can determine fully the future demands for its products and services until we see a full reopening and recovery in export and target markets.

It is imperative that we, as legislators, ensure that every attempt is made to make sure that no business is left behind and that everyone who has fallen is offered a helping hand as the country emerges from Covid and we continue to address the new realities of Brexit. On behalf of the many challenged entrepreneurs, business leaders and management teams that will need access to this funding, I welcome this proposed legislation.

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