Brian Hayes (Dublin South West, Fine Gael)
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Question 52: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if she has plans to establish a State guaranteed loan for small and medium enterprises; and if she will make a statement on the matter. [7396/09]

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have no plans to establish a State guaranteed loan for small and medium-sized enterprises, SMEs. The Government's recapitalisation scheme for Allied Irish Banks and Bank of Ireland, announced on Wednesday, 11 February 2009, is a fundamental requirement in restoring stability to our financial sector. Such stability will ensure that the financial institutions can actively contribute to our economic activity and particularly support our enterprise sector.

A key principle of the recapitalisation package is the recognition of the importance of business lending particularly for SMEs. Small and medium-sized enterprises are central to our economy and the provision of bank credit to the sector is a primary target of the overall package. This package contains a range of initiatives that will directly assist our enterprise sector in facilitating access to credit.

Under the recapitalisation scheme, Allied Irish Banks and Bank of Ireland have committed to measures to maintain a flow of credit to small businesses. They have committed to increasing lending capacity to small and medium-sized enterprises by 10% and to providing an additional 30% capacity for lending to first-time buyers in 2009. If the mortgage lending is not taken up, then the extra capacity will be available to SMEs. A €100 million environmental and clean energy innovation fund is also being established by each bank, as well as a further €15 million each to new or existing seed capital funds. Much of this funding will flow to small businesses.

The recapitalised banks have also agreed to fund and co-operate with an independent review of credit availability which will be managed jointly by the banks, Government and business representatives and will report within five weeks.

A code of conduct for business lending to small and medium-sized enterprises was published by the Financial Regulator on 13 February. This code will facilitate access to credit for sustainable and productive business propositions, and will promote fairness and transparency in the treatment of SMEs by banks. The code should strengthen the bank-client relationship and develop greater trust and confidence in the banks' lending practices. Banks are now actively promoting new lending as evidenced by recent press and television advertisements.

The Tánaiste met with representatives of the banks only last week and impressed upon them the need to ensure that credit is available to viable businesses. She has asked the banks and enterprise support agencies to work closely together to facilitate lending to enterprises.

Additional information not given on the floor of the House.

Funding to the SME sector is also provided through my Department and the State enterprise support agencies. The Department's continuous support for indigenous companies arises through maintaining a positive business environment and particular interventions from State agencies such as Enterprise Ireland, FÁS and the county and city enterprise boards. The allocations in my Department's Estimates for 2009 will ensure that we continue to build on this strategy for the future.

SMEs are central to our economic development and the range of measures and supports in place will continue to help the sector adapt to the current economic climate. The services provided by the development agencies are kept under review and will be adjusted to respond to the current economic situation.

James Reilly (Dublin North, Fine Gael)
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I thank the Minister of State for his reply. As regards State-guaranteed loans for small and medium-sized businesses, the Tánaiste alluded earlier to the fact that she met with SR Technics earlier today. The Minister of State also alluded to the fact that the Tánaiste met with the banks. Has such an initiative for SR Technics, where 1,200 jobs are to go, been considered? This is a viable business with 80% capacity booked on one line for the first two months of this year and 50% for the next line for the rest of the year. There is no shortage of orders because the order book is active up to 2016.

Brendan Howlin (Wexford, Labour)
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The Deputy is asking a general question but he should ask a specific question on this matter.

James Reilly (Dublin North, Fine Gael)
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I will ask a specific question. The Tánaiste alluded to interested parties, but will she inform the House how many there are? Has she considered a management buy-out or a workers' co-operative? Is there a subsidy? This is an important question.

Brendan Howlin (Wexford, Labour)
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The Deputy will realise that while this is an important issue, it is not relevant to the specific question the Minister of State is taking now. There are specific questions about this matter. I understand the Deputy's concern about it.

James Reilly (Dublin North, Fine Gael)
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The Minister of State saw fit to allude in his answer to first-time buyers. What has that go to do with small grants?

Brendan Howlin (Wexford, Labour)
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I will determine what is or is not in order. This is a very important matter and there are specific questions about it.

James Reilly (Dublin North, Fine Gael)
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With all due respect, we are not likely to reach those questions, are we?

Brendan Howlin (Wexford, Labour)
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The Deputy cannot simply piggy-back a question onto another one that is not directly relevant to it.

James Reilly (Dublin North, Fine Gael)
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It is relevant in this regard, a Leas-Cheann Comhairle — that there are State-guaranteed loans for small and medium-sized businesses. Has the Tánaiste considered this as an initiative concerning SR Technics, where there is a viable business and there could be a management buy-out or a workers' co-operative?

Brendan Howlin (Wexford, Labour)
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An tAire Stáit.

James Reilly (Dublin North, Fine Gael)
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She might, if she could, tell us about the ownership of the hangars.

Brendan Howlin (Wexford, Labour)
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The Minister of State is answering the question.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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If the Deputy had listened to the answer, he would know that I referred to mortgages because if they are not taken up, they can be moved on to the SME sector.

As regards the meetings the Tánaiste had with the banks in terms of businesses, banking and funding, all those issues can be taken up by the private sector in terms of purchasing any company, including the companies the Deputy mentioned. I am sure the State agencies would come to their assistance in terms of whatever they might be able to put into the arrangements. It is a matter for the private sector to deal with that, but the Tánaiste and her Government colleagues are on hand to give the necessary support and direction.

James Reilly (Dublin North, Fine Gael)
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So the Minister has no intention of having any further involvement in SR Technics?

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is not the answer.

Brendan Howlin (Wexford, Labour)
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I call Deputy Penrose.

Brendan Howlin (Wexford, Labour)
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Please, a number of Deputies are offering.

James Reilly (Dublin North, Fine Gael)
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I can read between the lines like anybody else.

Brendan Howlin (Wexford, Labour)
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I have called Deputy Penrose.

Mary Coughlan (Donegal South West, Fianna Fail)
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The Deputy should stick to the facts.

Brendan Howlin (Wexford, Labour)
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Minister, please. I have called Deputy Penrose. A number of Deputies want to get in and they will not be bullied out of it by other Deputies.

Willie Penrose (Longford-Westmeath, Labour)
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I gave one example of what is going on. Does the Tánaiste believe what the banks are telling her? Is the protocol she has agreed with them worth the paper it is written on or are they pulling the wool over people's eyes? Are the banks going to support small industries, such as those to which I referred, to ensure their survival or, in the case I cited, an expansion? If the other banks will not do so, we own Anglo Irish Bank. Will the Tánaiste give a direction to that bank to go to the European Investment Bank and drawn down €1 billion of the €30 billion available so that it can be made available to small and medium-sized businesses at a particular rate of interest? That is what will secure the future of our industries.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The banks have already made an application for the money from Europe, so that is currently under way and has been identified.

Willie Penrose (Longford-Westmeath, Labour)
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It took three months though.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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As regards the Deputy's other question, there are many examples, such as the one he gave. In response to that, there will be an independent review of banks' lending to ensure that they are responding positively to the SME sector. That has been set up. The banking arrangement with the SME sector will be the focus of attention to ensure that what the Deputy is requesting does happen.

Arthur Morgan (Louth, Sinn Fein)
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Does the Minister of State envisage a role for Enterprise Ireland in assisting banks to decide which businesses are more viable so as to ensure job retention and which need funding more urgently? Clearly, in recent times the banks have had an interest elsewhere and it was certainly not in business or good practice. Expertise from Enterprise Ireland may assist them in that regard.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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IDA Ireland and Enterprise Ireland are interested in the businesses affected in their sectors. The arrangements requested by the Deputy will be put in place.

Damien English (Meath West, Fine Gael)
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When the moneys are drawn down by the banks from the European Investment Bank, will the Minister of State ensure they are not attached to existing overdrafts and loans of small businesses? Backdating the moneys to existing loans could easily happen, allowing the banks to shore up their own balance sheets.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The moneys that will be drawn down will be for the SME sector and business in general.

Damien English (Meath West, Fine Gael)
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Yes, but they could be attached to existing loans.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The new group will monitor the availability of funding to the SME sector. Deputies English and Penrose are correct that it needs to be monitored to ensure it does what it says on the tin, so to speak.