Michael Healy-Rae (Kerry South, Independent)
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Question 319: To ask the Minister for Jobs, Enterprise and Innovation the steps he has taken to ensure that capital is available to medium and small industries to retain jobs and expand production when the opportunity arises; and if he will make a statement on the matter. [1287/12]

Richard Bruton (Dublin North Central, Fine Gael)
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The initiatives taken by the Minister for Finance in March 2011 to reorganise, recapitalise and deleverage the domestic financial system is the principal response to restore the banks to health and provide credit to business.

This latest restructuring created capacity for the pillar banks to lend in excess of €30 billion over 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 were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Each bank has informed the Department of Finance that they expect to have met their lending targets for 2011. In addition to the initiatives of the Minister for Finance, work is underway within my Department on a Temporary Partial Credit Guarantee to address two specific market failures which act as barriers to lending to viable enterprises. These market failures are inadequacy of collateral and inadequacy of understanding of the novelty of a business model, market, sector or technology. Eligible companies will be commercially viable, well performing companies that have a solid business plan and a defined market for their products or services, thereby demonstrating their ability to repay the loan. The scheme will be demand-led, and for every €100million guaranteed will benefit over 1200 businesses, and provide at least €15million in net benefit to the exchequer.

In line with the commitment in the Programme for Government, a Microfinance Fund to provide loans to small businesses is also being developed within my Department for establishment early this year. It is anticipated the Micro Finance Loan Fund will generate up to €100million in additional micro-enterprise lending which will benefit over 5,000 businesses over a ten year period.

These initiatives are not designed to replace current lending through the banking system but to provide additional lending where specific measures are warranted. They are intended to complement existing supports, including provision of capital funding, to SMEs delivered by the enterprise agencies.