Richard Bruton (Dublin North Central, Fine Gael)
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Question 264: To ask the Minister for Finance the range of European Union programmes for providing credit to small and medium enterprises and the number of these from which Ireland has drawn down funding and the value of funding drawn down by small business here during 2009 on each programme; and if he is satisfied with the mechanism here for accessing these funds and if he is considering mechanisms outside the banking system for accessing such moneys. [5303/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The decision of any eligible Irish undertaking, including financial institutions, to make an application under any particular EU scheme would be a commercial matter for the institution involved. Applications are between the undertaking involved and the relevant EU institution providing support. The Irish Authorities would not necessarily be made aware of individual applications made to EU support schemes which allow for direct applications. I am aware of two European programmes in operation from which Irish banks avail of funding; EIB loans for SMEs and the Competitiveness and Innovation Programme operated by the European Investment Fund. Four banks operating in Ireland have access to the EIB facility: Allied Irish Bank, Bank of Ireland and Ulster Bank have access to €100 million each and Bank of Scotland Ireland has access to €50 million. It is important to emphasise that the EIB makes funding available for onlending to SMEs as part of its mandate to assist the development of the SME sector. As a result, commercial banks that borrow from the facility are required to ensure that the money is onlent to SMEs for investment and expansion of their activities. It follows that there are significant constraints on lending from the EIB scheme. Borrowing for short-term working capital is generally not eligible, although a permanent increase in working capital required to develop an expanding SME would qualify. Loans for cash flow or the refinancing of other debt and generally for the takeover of other businesses would not qualify.

The Competitiveness and Innovation Framework Programme 2007-2013 (CIP) 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, through financial intermediaries. The SME Guarantee Facility is operated by the European Investment Fund (EIF) on behalf of the European Commission. Irish financial intermediaries are free to make contact directly with the EIF concerning participation in the facility. I understand that some have done so. The Department of Enterprise, Trade and Employment has informed the Irish Bankers' Federation of the facility, the operation and the scope of the arrangement and has made itself available to any bank interested in pursuing the possibility of securing funding under the SME guarantee in terms of facilitating contacts with relevant officials in the European Investment Fund and/or the European Commission, for further advice and assistance. The distribution of drawdowns across institutions is of commercial sensitivity but indications are that substantial amounts of lending under the facility have been approved across a wide range of sectors. While participation by the financial institutions in any EU programme is a commercial decision for the institution concerned, I would urge financial institutions and SMEs to make use of EU funding opportunities where appropriate.