Jan O'Sullivan (Limerick East, Labour)
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Question 53: To ask the Minister for Finance his views on the establishment of a fund to lend directly to small and medium enterprises, ensuring that they can access credit and working capital; and if he will make a statement on the matter. [45357/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Lending by banks is, in the first instance, a commercial decision for individual financial institutions who will evaluate loan applications submitted by small and medium enterprises (SMEs). Through the introduction of the Bank Guarantee Scheme the Government have sought to maintain an environment where the financial markets can continue to function normally and banks can continue to support economic activity through their lending policies.

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 needs of the SME sector and I will keep this important area of economic activity under review.

The Deputy will be aware that in my Budget speech on 14 October, I announced tax relief measures which will assist the SME sector by way of remission in Corporation Tax and Capital Gains Tax in the first three years for start-up companies. These measures will help to grow small business and promote an entrepreneurial culture.

My colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Mary Coughlan, TD, has responsibility for enterprise development, including supports for SMEs. Support for indigenous companies arises through maintaining a positive business environment and through particular interventions from the State development agencies such as Enterprise Ireland, FÁS and the County and City Enterprise Boards. The significant allocations in the 2009 Estimates to the Department of Enterprise, Trade and Employment and to its development agencies will provide for the continued support of the SME sector.

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.