Alan Kelly (Tipperary, Labour)
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6. To ask the Minister for Finance if his attention has been drawn to concerns that the funds being made available by the Strategic Banking Corporation of Ireland, SBCI, are not reaching a sufficient number of small and medium enterprises, SMEs; and if he will make a statement on the matter. [50874/17]

Joan Burton (Dublin West, Labour)
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What funding is available through SBCI and how much of it is going to small and medium-sized businesses as opposed to bigger businesses?

Paschal Donohoe (Dublin Central, Fine Gael)
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The SBCI's purpose is to facilitate access to more flexible, appropriately priced finance with better terms to SMEs as well as promoting the economic development of rural and regional SMEs. It does this by delivering effective financial support to Irish SMEs and addressing failures in the Irish credit market while also encouraging competition and innovation.

It began lending in March 2015. To the end of June 2017, €855 million of SBCI funding has been provided to 21,132 Irish SMEs, directly and indirectly supporting 106,728 jobs. This represents an increase of 57% in SBCI lending since the end of December 2016. The interest rate on SBCI loans is 1.15% lower than the average market interest rate on loans to SMEs and 85% of SBCI loans were to SMEs based outside of Dublin.

The SBCI has €1 billion of funding available from the German bank KfW, the European Investment Bank, EIB, the National Treasury Management Agency, NTMA, and the Council of Europe Development Bank, as well as a loan facility of €215 million available from the Ireland Strategic Investment Fund, ISIF. To date, €881 million of that funding has been committed to the SBCI's seven on-lenders, of which three are banks and four are non-bank finance providers. As the Deputy is aware, the SBCI does not directly lend to SMEs and other organisations but does so via intermediaries.

The lending is largely driven by market demands as well as needs that are not fully met by the private sector. My Department's biannual SME credit demand survey indicates that demand for credit from SMEs has been decreasing and that only 20% of SMEs having sought bank finance in the past six months.

Joan Burton (Dublin West, Labour)
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My concern is that this mechanism is not as widely available as it should be. My understanding is that much of it is available through the pillar banks and that, as in the case of the Ireland Strategic Investment Fund, ISIF, to some extent, there does not seem to be any great desire to advertise the take-up to SMEs. The interest rate quoted by the Minister is relatively high by European standards. Presumably, it has been designed to help the banks to gather more profit on their business. In areas on the fringes of Dublin or in rural Ireland there are many opportunities and sites that would allow for affordable and social house building, provided small or medium-sized construction firms could access credit. I appreciate that many of them have an impaired credit rating as a consequence of the crash and may not be in a position to access finance. If the Minister wants to make an impact on the housing construction figures which, notwithstanding all of the efforts made and the money allocated in theory, are actually very slow-----

Pat Gallagher (Donegal, Fianna Fail)
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The Deputy must, please, finish.

Joan Burton (Dublin West, Labour)
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-----he should utilise this measure.

Pat Gallagher (Donegal, Fianna Fail)
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I ask Deputies and the Minister to observe the time limits.

Paschal Donohoe (Dublin Central, Fine Gael)
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In response to the Deputy's two points about the availability of credit for SMEs outside Dublin I reiterate the point I made, that 85% of the funding available to the Strategic Banking Corporation of Ireland for lending is made available through its intermediaries to SMEs located outside the capital city. This points to the fact that it has been successful in supporting SMEs in rural Ireland and other cities. It has also participated in several initiatives to make known the funding it is able to provide through the banks, for example, using the SME online tool. If an SME answers eight questions about the size of its business, it will be made aware of the support open to it, including support and credit enabled by the Strategic Banking Corporation of Ireland.

In response to the Deputy's second point about additional home building and the need for small companies to gain funding which they cannot access to build homes, I will set up home building finance Ireland-----

Pat Gallagher (Donegal, Fianna Fail)
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The Minister's time is up.

Paschal Donohoe (Dublin Central, Fine Gael)
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I was asked several questions. If I did not answer the questions put to me, the Deputy would say I was not answering her questions.

Pat Gallagher (Donegal, Fianna Fail)
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The Minister was asked one question. He has to stay within the number of minutes allocated to him.

Paschal Donohoe (Dublin Central, Fine Gael)
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Briefly, that is why we are setting up home building finance Ireland early next year to provide funding for the kind of projects to which the Deputy referred.

Joan Burton (Dublin West, Labour)
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The Minister said in a reply to me yesterday that he did not anticipate legislation on home building being brought before the Dáil until some time in the new year and that home building finance Ireland would be set up later in 2018. That is part of my concern because that means that it will be the guts of another full year before it is fully under way because it will have to establish itself and will probably then be working through the pillar banks. There are bureaucracy and organisation involved, followed by loan assessments and evaluations. The end result is the reason credit and funding are not flowing into small-scale house building, whether on the fringes of Dublin where there are more sites available or throughout the rest of the country.

Paschal Donohoe (Dublin Central, Fine Gael)
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Home building finance Ireland will not be lending through the pillar banks or intermediaries. It will lend directly to companies that can provide a viable business plan, that are deserving of funding and that need funding. They will not do it through intermediaries for the reason identified by the Deputy. Those involved in running home building finance Ireland and those who will be making credit decisions are well capable of doing that work and I do not see the need for any existing bank to play an intermediary role. On the timing, I said I was aiming to bring the legislation before the House early next year and to have the organisation set up and running before next summer. While that may not be as fast as the Deputy wants, putting in place a new organisation such this over several months is, by any objective measure, a fast response to what I acknowledge is a problem we need to address.

Pat Gallagher (Donegal, Fianna Fail)
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We will move to Question No. 7 in the name of Deputy Michael McGrath.

Pearse Doherty (Donegal, Sinn Fein)
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I seek guidance, please. Are Questions Nos. 7 and 32 being grouped together? They both deal with the Ulster Bank Global Restructuring Group, GRG, and the interaction between the Minister and the Central Bank. I did not see any notification of this fact.

Paschal Donohoe (Dublin Central, Fine Gael)
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They are the same question and I am happy for them to be taken together.