Kathleen Lynch (Cork North Central, Labour)
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Question 44: To ask the Minister for Finance the extent to which small businesses and personal borrowers are having difficulties in accessing the credit they need; and if he will make a statement on the matter. [45346/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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An important aim of the Bank Guarantee Scheme is to ensure that we have a banking system that as a whole works effectively, efficiently and competitively in facilitating all the day-to-day ordinary economic transactions of commercial, business, family and social life. At a round of meetings with the banks covered by the guarantee scheme on 28 November I asked them to come back to me with proposals regarding the extension of credit to SMEs, thus helping to ensure that the banking sector serves the needs of the Irish economy. I welcome the fact that many of these institutions have already announced funding schemes aimed at meeting the funding needs of the SME sector.

I will continue to keep this most important area of economic activity under review. The bank guarantee scheme includes strict terms and conditions on covered institutions to ensure that the public interest, which includes the general consumer and small business sector, is protected. By putting guarantees in place we have removed a major obstacle to financial institutions continuing to play their proper role in facilitating enterprises and individuals with credit where it is sought on the basis of a sound business proposition.

The extent of lending to the small and medium enterprise (SME) sector is dependant on demand by businesses as well as on the supply of lending by the banks. My colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Ms. Mary Coughlan, T.D., has asked Enterprise Ireland to carry out a survey examining the effects of the current credit situation on lending to the SME sector. While this survey is as yet incomplete, initial indications are that while there has been a reduction in lending, most of companies approaching the banks have received some or all of the finance requested, albeit with greater restrictions in place.

Finally, I would also point out that the European Investment Bank (EIB) recently announced that it was increasing its support for Europe's SMEs to help mitigate the effects of the current credit crisis. I understand that the EIB has had discussions with a number of Irish banks about participation in the facility.