Lucinda Creighton (Dublin South East, Fine Gael)
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Question 91: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the measures she has introduced to ensure that viable small and medium sized enterprises are not put out of business by the lack of access to credit; and if she will make a statement on the matter. [11430/10]

Mary Coughlan (Donegal South West, Fianna Fail)
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The Government has taken a range of 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 massive effort we have put into the entire NAMA process are all with the single purpose of getting our banking sector supporting the wider economy. NAMA is absolutely necessary to clean up the balance sheets of the banks and to create a functioning banking system in Ireland. NAMA will not solve everything nor is it all we need to do. NAMA is making banks come forward with declaring the scale of their losses up front and resulting capitalisation plans will have to involve state investment as well.

As the Taoiseach has already announced, the Government's plans to restructure the banking sector are imminent and will be announced over the coming weeks. Further Recapitalisation of the banks will feature in these plans. The Minister for Finance will shortly be issuing guidelines to ensure that businesses will have recourse to an independent, external review of decisions of credit refusal by the NAMA participating banks. It is hoped that banks not participating in NAMA or covered by the Government guarantee will also decide to join the system. The aim is to have a simple, effective review process, run by people with experience and credibility. The banks must comply with the recommendations of the review process or explain why they will not do so. In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help to determine what further action might be necessary to secure the flow of credit. The Minister for Finance intends to publish the analysis from the review process so that the performance of the banks participating in NAMA will be clear to all.

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 €15m 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 two Independent Reviews of Bank Credit by Mazars in July and December 2009. Arising from the Recapitalisation Package, the Minister for Finance and I also established a Credit Supply Clearing Group with bank, business (including ISME and SFA) and State representation. This Group is responsible for identifying patterns of events where the flow of credit to viable businesses appears to be blocked and for seeking to identify credit supply solutions relating to these patterns. The Credit Supply Clearing Group is being chaired by my Department.

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 €300m available to Bank of Ireland, Allied Irish Banks and Ulster Bank for onward lending to SMEs carrying out investment projects. This was additional to €50m previously made available to Bank of Scotland Ireland through its UK parent. The distribution of draw-downs 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.

Within my own Department, the enterprise development agencies such as Enterprise Ireland, FÁS and the County and City Enterprise Boards have continued to assist enterprises through their grant and advisory schemes. Significant allocations were made in my Department's Estimates for 2009 and 2010 to sustain the work of these development agencies. The Enterprise Stabilisation Fund and the Employment Subsidy Scheme are additional measures to make funding available to assist SMEs through the current difficulties. 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. I published returns for the quarter ending 31 December 2009 on my Department's website last Friday, 5 March 2010. Central Government Departments are generally paying 97.9% of their invoices by value within 15 days.

I have re-convened the Small Business Forum to gain its assessment and views on the impact of the current economic situation on the needs of the SME sector as it positions itself for recovery. The SBF will also consider the new arrangements now necessary for ongoing structured dialogue between policy makers and stakeholders in the sector to ensure a continued common understanding of all the issues and the potential means of address. I also recently confirmed that work is underway within my Department on the examination of a possible scheme of Loan Guarantees for the SME sector. Enterprise Ireland and Forfás have carried out examinations of loan guarantee schemes in the UK and in some other countries. Forfás, together with the Department, is carrying out a further examination on the matter.

A properly tailored and targeted scheme could prove successful in assisting viable companies secure credit that they might not otherwise get. It will be necessary to ensure that any scheme developed directly assists businesses while at the same time safeguards the taxpayer. SMEs are central to our economic development and the range of measures and supports in place will be kept under review to ensure that they continue to help the sector adapt to the current economic climate.