Damien English (Meath West, Fine Gael) | Oireachtas source

We did not rule it out of order. After the legislation passes through the Houses we will complete agreements with the banks. Agreements will be signed between the Strategic Banking Corporation of Ireland, ourselves and the banks, which will detail what they intend to do. We will have tables that will show the benefit of the scheme and the guarantee. The legislation is intended to provide assistance from the State to qualifying enterprises. It leverages financial institutions in the network to provide much-needed liquidity to SMEs. The benefits under the EU framework are for SMEs and not for banks.

The Senator mentioned the banks making a profit if the loans are successful. If the loans are successful there will be no drawing on the guarantee because it is to guarantee the loan. It is used if the loans are not successful. To be clear, this is not to give the banks increased or excess profits. It is to introduce an interest reduction. That is what we are trying to do. This is the benefit to the SME. There is no benefit to the bank if there is an interest reduction because it will receive less interest. The guarantee puts them in a position to lend. We want banks to loan the money at a lower cost in a greater capacity. This is why we are choosing to do this. We are asking the banks to loan this money. We are giving this guarantee because we want SMEs supported.