Sandra McLellan (Cork East, Sinn Fein)
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5. To ask the Minister for Jobs, Enterprise and Innovation the number of meetings that he has had with banks to deal with the issue of small and medium enterprise lending. [42596/13]

Richard Bruton (Dublin North Central, Fine Gael)
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Liaising with banks in respect of their lending to small to medium-sized enterprises, SMEs, has been a continuous process involving myself, colleague Ministers and officials. Most recently I met the CEO of one of the pillar banks in June.

The Cabinet committee on mortgage arrears and credit availability meets monthly and reviews access to finance for SMEs, including bank lending to SMEs. The credit consultation committee established under the terms of the Action Plan for Jobs has met seven times since its inception to discuss with the banks and other interested parties the availability of credit to SMEs.

In developing the Action Plan for Jobs, I have sought the broadest possible involvement through submissions and regional meetings. I have included banks in this process. I have had direct meetings with senior bank executives at national level. The Minister of State, Deputy Perry, has also undertaken a specific regional round of seven meetings on access to finance.

As the Deputy knows, arising from this work I have developed the micro-finance initiative, the loan guarantee scheme and the development capital fund. My Department is in regular contact with the pillar banks to discuss the availability of credit to the SME sector and to discuss the performance of the SME credit guarantee scheme and the micro-enterprise loan fund, which the Minister of State has outlined to the House. My officials and I also work closely with the Credit Review Office, CRO, to track lending and credit refusals in order to safeguard businesses and jobs.

Sandra McLellan (Cork East, Sinn Fein)
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The SME sector is responsible for more than 78% of all jobs in the economy. We supported the Government when it introduced the micro-enterprise loan and credit guarantee schemes.

These schemes were developed to supplement bank lending and not replace it. They are not performing and should be reviewed. Given that the cost of the credit for the microenterprise scheme exceeds the market rate, this is not surprising. However, we believe that if amended, these schemes can play a role for SMEs.

Bank lending to the SME sector continues to be troubled. SME rates of refusal are growing again, as demonstrated by ISME surveys. The Credit Review Office continues to challenge the individual decisions of banks after an application has been refused.

How can the Government use its standing as a major creditor of the banking system to ensure banks lend to meet the cashflow and investment needs of SMEs? In his meetings with the banks, did the Minister raise the issue of meaningful additional lending targets as separate from roll-over loans? Has he raised the issue of legacy loans arising from property that are dragging down viable businesses? When will banks start putting the people's money to productive use?

Richard Bruton (Dublin North Central, Fine Gael)
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There is a lot in the Deputy's questions. I thank both Opposition parties for their support for the two initiatives - microfinance and the credit loan guarantee. They are new and have not been tried before. We are determined to improve them, and the Minister of State, Deputy Perry, has outlined the position concerning microfinance. There is also a later question about the credit loan guarantee. We have initiated a review and are re-examining the terms of that guarantee. We want to improve it in order that it can meet the ambitions we all have for it.

Data are hard to get concerning the refusal of loans to SMEs. However, the Red C survey undertaken for the Government shows an improvement in refusal rates, although it is still too high. We must ensure the requirement to be refused a loan before accessing microfinance or a loan guarantee should not become a bureaucratic obstacle. We are trying to streamline that as well as ensuring bankers in the front line know such schemes are available. They should direct people, at the time of a refusal, to actively consider these alternatives.

Banks are meeting their lending targets but the Deputy is right that new lending to SMEs has only risen in two quarters out of the last four. It is bouncing along at a level of about €2 billion a year. I would certainly like to see that figure growing. That is not to say, however, that the other restructuring offers are not important as well. We have ambitions to have more targets in the area of new lending.

Sandra McLellan (Cork East, Sinn Fein)
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I thank the Minister for his reply. Many businesses were told by banks to diversify their investments, including property. Many SMEs followed this advice. The Government moved with indecent speed to support major developers and bail out the banks. What is the plan to secure jobs in viable SMEs which are burdened by legacy loans?

Richard Bruton (Dublin North Central, Fine Gael)
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When the Deputy says "bail out developers", the truth is that no developer has received any bailout. As the Deputy knows from newspaper reports, developers are being continuously pursued for assets by State agencies. Of course, we have had to keep the banks open. Bank shareholders have been wiped out, but the banks continue, and we need to rebuild solid lending institutions focused on the needs of SMEs.

There are many problems in this area, and there is no doubt that a banking system that is reducing the size of its loan book and is trying to get back into a proper relationship is constrained. On aggregate, we have €2.5 billion in alternative funding sources for business that is not coming from banks. That is part of our response, between the National Pensions Reserve Fund, development capital funds and the schemes to which we referred. There are targets on pursuing the banks but we are also introducing new vehicles that we must make strong and roadworthy. That process is continuing.