Joe McHugh (Donegal North East, Fine Gael)
Link to this: Individually | In context

Question 173: To ask the Minister for Finance the plans in place to free up working capital for small businesses to survive in the short-term; if he will facilitate small businesses employing four employees with three to four months work ahead of them by providing access to €50,000 in the short-term; and if he will make a statement on the matter. [6094/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

As part of the recapitalisation package announced last week, Allied Irish Banks and Bank of Ireland have reconfirmed their December commitment to increase lending capacity to small and medium enterprises (SMEs) by 10% and to provide an additional 30% capacity for lending to first time buyers in 2009. The banks have committed to public campaigns to actively promote their lending to these sectors. If the mortgage lending is not taken up, then the extra capacity will be available to SMEs. Compliance with this commitment will be monitored by the Financial Regulator. AIB and Bank of Ireland have also committed to public campaigns to actively promote small business lending at competitive rates with increased transparency on the criteria to be met. The banks will make quarterly reports to the Financial Regulator, with the first report to end March 2009 to be submitted by end April 2009.

The recapitalised banks have also agreed to engage in a 'clearing group' chaired by a Government representative and including representation from business interests and State agencies. The purpose of this group will be to identify specific patterns of events or cases where the flow of credit to viable businesses appears to be blocked and to seek to identify credit supply solutions. There will also be an independent review of credit availability funded by the banks but managed jointly by the banks, Government and business representatives.

In addition, a Code of Conduct for Business Lending to Small and Medium Enterprises was published by the Financial Regulator on the 13th of February. This code will apply to all regulated banks and building societies and will facilitate access to credit, promote fairness and transparency and ensure that banks will assist borrowers in meeting their obligations, or otherwise deal with an arrears situation in an orderly and appropriate manner. The business lending code includes a requirement for banks to offer their business customers annual review meetings, to inform customers of the basis for decisions made and to have written procedures for the proper handling of complaints. Where a customer gets into difficulty the banks will give the customer reasonable time and seek to agree an approach to resolve problems and to provide appropriate advice. This is a statutory code and banks will be required to demonstrate compliance.