Jimmy Harte (Labour) | Oireachtas source

As usual, the Minister of State is welcome. He has been highly proactive in the small business area as he comes from such a background. Small and medium-sized enterprises, together with the farming industry, are so important. I note representatives of the latter were here in force today outside Leinster House. The problem for any small business in today's economy is accessing liquidity or credit to keep afloat.

Many businesses are on the margins of survival. We have many initiatives in place which are helping. It will be a long road but it will be successful in the end.

I refer to the Credit Review Office. According to the latest figures on bank decisions, overturned applications are up 35%. I said previously that it would be a more efficient use of the Credit Review Office's time to put a stamp of approval on applications before they hit the bank because there seems to be a time delay. Sometimes banks put applicants off either at the front desk or over the telephone rather than take a formal application. On many occasions, good applications are turned down by the banks only for the decision to be overturned by the Credit Review Office.

John Trethowan said that in the past three months, the Credit Review Office received 36 eligible applications from SMEs refused credit by AIB and Bank of Ireland - the two pillar banks - that work is ongoing on 12 cases and that three have been withdrawn. He also said that of the 21 cases completed in this quarter, 14 bank refusals were overturned resulting in the two banks subsequently supplying ¤1.18 million of credit, supporting a further 106 part-time and full-time jobs in the SME sector. The banks must be dragged into this equation because without the existence of the Credit Review Office, those 106 jobs would have been at risk and people may have ended up on the dole.

I give credit to John Trethowan but he must get support from the banks. In his ninth quarterly review, which was issued yesterday, he said that only three banks are actively lending in the SME sector, namely, Bank of Ireland, AIB and Ulster Bank. He pointed out that there is a lack of competition in lending which, over the years, was a driver of credit, although maybe overdriving it. However, the banks are now probably sitting back and hoping people do not come in looking for loans because they do not want to take the risk. With pressure from the Government, the banks have to lend. They have been looked after by the taxpayer and we effectively own them. At times, the banks do not give credit when first asked.

I said previously that there is a negative perception among small businesses and farmers that they are wasting their time applying for loans because there seems to be a perception - it is fostered by a few front line staff in banks - that people should not bother applying for loans because they will probably not get them. There is perhaps negative media coverage of banks and people are afraid to go in. If one has a small businesses, is trying to get one's feet on the ground and is struggling to meet wage bills, tax returns and suppliers, the last thing one wants is a session with a bank, which can be intimidating.

I said previously the Credit Review Office could play a role in giving an indication to the client that he or she should go for the loan based on a very good application. There is a role for the accountant to put the loan package application together very well rather than shabbily. The banks would get an indication that the Credit Review Office has looked at the application and is favourable towards it. That might speed up the process and keep a business going because currently, for small businesses waiting one month or two months for a decision, it can be the difference between surviving and not surviving. Survival means the preservation of five, ten, 50 or 100 jobs, as John Trethowan outlined.

I welcome the Minister of State's efforts, which are being successful. I come from a small business background and it is difficult to survive in a recession. Senator Barrett said some of the bigger companies come out of recessions but there are many stories of small businesses which have been wiped out. They are just statistics. Ryanair is probably the exception as is the Kerry Group and they come out of recessions stronger.

Businesses employing two, three or four employees are the backbone of the economy along with small farmers and shopkeepers. I would encourage the Credit Review Office, CRO, to continue its good work and ask the banks to meet their obligations because if businesses are not making money, the banks are not making money and until the banks start making money again and repay the taxpayer, we will be in a downward spiral.