Joe McHugh (Donegal North East, Fine Gael)
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Question 52: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her views on guaranteed loans for small and medium enterprises with the view of supporting maintaining employment in the sector; and if she will make a statement on the matter. [44563/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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As I have previously outlined to the House on a number of occasions over recent months, in supporting small and medium enterprises, the Government's focus has been on actions to sustain a positive business environment, including the proper functioning of the banking system, allied with specific targeted supports for SMEs through my Department's enterprise development agencies.

Developments in the financial sector and wider economy during the last year have, in particular, broadened the concerns for SMEs in relation to gaining access to finance and bank credit.

My Department and I have held regular meetings with the representative bodies of the SME sector and other stakeholders in relation to issues impacting on the sector. I established the Roundtable on Access to Bank Credit and subsequently the Credit Supply Clearing Group with a dedicated e-mail contact point on my Department's website, to specifically deal with access to bank credit issues.

The Government has focused on creating a fit for purpose banking system and taken actions to sustain the banks and facilitate the flow of credit to the wider economy. The Bank Guarantee Scheme, the Banks' Recapitalisation Scheme, the nationalisation of Anglo Irish Bank and the passing of the NAMA Act are all aimed at this. The NAMA Act has been further strengthened by the Government amendment providing the Minister for Finance with a power to issue guidelines, to the participating institutions in the NAMA process, on lending practices and procedures to improve the flow of credit to small and medium-sized enterprises and, if necessary, to other sectors.

Under the Recapitalisation Scheme, additional measures were introduced to support SMEs including a commitment to increase lending capacity to SMEs by 10%; the establishment of a €100m environmental and clean energy innovation fund by each bank; the contribution of a further €15 million by each bank to new or existing seed capital funds; the introduction of the banks' Code of Conduct on Business Lending to SMEs, and the undertaking of an Independent Review of Bank Lending by Mazars published last July. A second Review of Bank Lending again by Mazars is currently nearing completion and will also be published shortly.

In the context of access to finance, Irish Banks have drawn down European Investment Bank (EIB) funding for loans for SMEs. In 2009, the EIB made €300 million available to Bank of Ireland, Allied Irish Banks and Ulster Bank for onward lending to SMEs carrying out investment projects. This was additional to €50 million previously made available to Bank of Scotland Ireland through its UK parent. My colleague, Billy Kelleher, Minister for Trade And Commerce, met with representatives of these four banks last week to discuss progress on the take up of these funds. The banks have confirmed that significant approvals have already been made to clients in respect of these funds and the funds should be substantially committed by the first quarter of 2010. The banks are actively promoting their availability through their business managers and other contacts. It is likely that Banks are also promoting new lending products to SMEs as evidenced by recent press and TV advertisements.

Within my own Department, the enterprise development agencies such as Enterprise Ireland, FÁS and the County and City Enterprise Boards continue to assist enterprises through their grant and advisory schemes. Significant allocations were made in my Department's Estimates for 2009 to sustain the work of the development agencies. I refer particularly to the Enterprise Stablisation Fund and the Employment Subsidy Scheme.

Government has also introduced formal arrangements to reduce the payment period by central Government Departments to their business suppliers from 30 to 15 calendar days. This commitment has effect on all valid invoices received on and from 15 June 2009 and is helping cash flow difficulties for enterprises.

SMEs are central to our economic development and the range of measures and supports in place will continue to help the sector adapt to the current economic climate. The services provided by the enterprise development agencies are kept under review and will be adjusted to respond to the current economic situation.

I am prepared to consider any proposals for further supports for the SME sector. Factors that have to be taken into account in considering any loan guarantee proposal include the likely cost to the taxpayer and the extent to which such schemes in other jurisdictions have actually increased lending.