Ruairi Quinn (Dublin South East, Labour)
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Question 43: To ask the Minister for Finance the extent to which Irish enterprises and lending institutions have utilised EU funding for small and medium enterprises through the competitiveness and innovation framework programme and joint European resources for micro-to-medium enterprises; the extent to which he and his Department have encouraged financial institutions to provide European investment fund guaranteed loan finance to small businesses in the period from May 2007 to date in 2008; and if he will make a statement on the matter. [45359/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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In relation to the general question of small and medium enterprises (SMEs) being able to access finance, I am very conscious of the difficulties that are being faced by Irish businesses in this regard. At my meetings with certain financial institutions over the last two weeks, I asked those institutions covered by the Government's guarantee scheme to consider the contribution that they can make to the economy through appropriate credit initiatives in relation to small and medium sized businesses and otherwise. I, therefore, welcome the fact that certain institutions have announced initiatives in this regard.

The Deputy may be aware that I recently met the Vice-President of the European Investment Bank (EIB) who has responsibility for the Bank's activities in Ireland. The EIB recently announced that it was providing additional funding through its lending facility for SMEs in the European Union. The Vice-President confirmed that the Bank has been in discussions with a number of Irish financial institutions about participating in this facility for SMEs and that the EIB hopes that agreements to provide such loan facilities can be finalised as soon as possible. I have urged Irish banks to utilise the facility to the maximum extent possible with a view to making the additional funding available to SMEs as soon as possible. It is, therefore, good to note that a number of banks have announced their intention to do so.

Additionally, with my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Mary Coughlan, TD, I have been in regular contact with the banks regarding the flow of lending to small business.

I am also informed by the Tánaiste, that the Competitiveness and Innovation Framework Programme (2007-2013) contains a financial instrument, the SME Guarantee Facility, that aims to improve the financial environment for SMEs by facilitating their access to debt and equity finance and that the SME Guarantee Facility is operated by the European Investment Fund (EIF) on behalf of the European Commission. I would urge financial intermediaries to make contact directly with the EIF concerning participation in the facility and I am informed that some have done so in the past.

In response to a recommendation of the Small Business Forum in relation to the above loan guarantee facility, I understand that the Department of Enterprise, Trade and Employment provided information to the Irish Bankers' Federation on the proposal in December 2006, including the operation and scope of the arrangement. I also understand that the Department of Enterprise, Trade and Employment has made itself, and continues to make itself, available to any bank interested in pursuing the possibility of securing funding under the SME Guarantee, with a view to facilitating their contact with relevant officials in the EIF and the European Commission, as appropriate, for further advice and assistance.

I understand that proposals from financial intermediaries will be examined by the EIF on a continuous basis, within the constraints of the available Community budget allocations. Irish financial intermediaries will, therefore, continue to have an opportunity to participate in the facility. I am informed that the Department of Enterprise, Trade and Employment will continue to encourage participation and will remain available to financial intermediaries wishing to access the facility. Participation in the facility is, of course, a commercial decision for any financial intermediary concerned.

In addition, I am informed that the Department of Enterprise, Trade and Employment, in response to a recommendation of the Small Business Forum, is currently researching the possibility of the financial institutions accessing loan guarantees from the European Investment Fund that would enable them to expand their lending to small enterprises.