Niall Collins (Limerick, Fianna Fail)
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Question 13: To ask the Minister for Jobs, Enterprise and Innovation his views that Irish business are experiencing great difficulties in accessing credit; the measures he will take to alleviate these difficulties; and if he will make a statement on the matter. [28825/11]

Richard Bruton (Dublin North Central, Fine Gael)
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The initiatives taken by the Minister for Finance to restructure and re-capitalise the banking system is the principal response to making credit available. At the end of March 2011, a range of measures was announced to reorganise, recapitalise and deleverage the domestic financial system in order to restore the banks to health and continue to provide a secure banking system for deposits.

This latest restructuring of the domestic banking sector creates capacity for the pillar banks to lend in excess of €30 billion over the next three years in SME and other important sectors. This is in excess of Central Bank estimates of the likely demand for SME and mortgage credit over this period. Government has imposed lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks will be required to sanction lending of at least €3 billion this year, €3.5 billion next year and €4 billion in 2013 for new or increased credit facilities to SMEs.

In addition to the initiatives of the Minister for Finance, work is underway within my Department on the design of a Temporary Partial Credit Guarantee Scheme. The Scheme will provide a level of guarantee to banks against losses on qualifying loans to job-creating firms to get banks lending again to industry and entrepreneurs. This Scheme will be closely targeted at commercially viable, well performing companies that have a solid business plan and a defined market for their products or services which can demonstrate repayment capacity for the additional credit facilities but which do not secure credit facilities due to the following two market failures:

· Insufficient collateral for the additional facilities or,

· Growth / expansionary SMEs which due to their sectors, markets or business model are perceived higher risk under current credit risk evaluation practices.

A loan guarantee would be provided by the guarantor (the State) to the lender, under strict criteria to target the identified market failure, thereby facilitating the outflow of additional credit from the banks. The scheme will be introduced on a temporary basis with a review after year one before any commitment is given to extending the scheme for a further period of time. This scheme will form a key component in the suite of initiatives aimed at ensuring the flow of credit.

Furthermore, in line with the commitment in the Programme for Government, a Microfinance Start-Up Fund to provide loans to small businesses is being developed. My Department is also taking the lead on this initiative and has met with relevant stakeholders, including the European Investment Bank, organisations with experience in the area of Microfinance in Ireland, as well as with the relevant Government Departments. The Fund, including scheme design and appropriate delivery mechanisms, will be developed with a view to formalising proposals in the context of Budget 2012.