Written answers

Thursday, 7 June 2012

Department of Enterprise, Trade and Innovation

Small and Medium Enterprises

8:00 pm

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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Question 14: To ask the Minister for Jobs, Enterprise and Innovation the actions he has taken to improve credit conditions for small and medium enterprise; his views on the success or otherwise of these actions; and if he will make a statement on the matter. [27537/12]

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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Question 19: To ask the Minister for Jobs, Enterprise and Innovation his views on the level of support being offered to small and medium enterprises by the major banks; and the additional supports he believes this sector requires. [27327/12]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I propose to take Questions Nos. 14 and 19 together.

As the House is aware, the Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending, including lending for working capital purposes, 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. Both banks achieved their 2011 targets. The progress on their lending plans is closely monitored each month.

Notwithstanding this close monitoring, access to finance in the current risk averse lending environment remains restricted for certain sectors. Mr. John Trethowan stated on Tuesday in his latest report that although the pillar banks are being supportive of medium and low risk new lending to well established SMEs and farms, there is little evidence of support for "enterprise risk taking" on new and increased lending in the banks' lending policies. The Deputy will be aware that I am introducing two targeted initiatives to support an additional flow of credit into the economy. I am currently finalising primary legislation to establish both a MicroEnterprise Loan Fund and a Partial Credit Guarantee Scheme, thereby supporting micro enterprises and specific categories of SMEs with commercially viable proposals that do not meet the conventional risk criteria applied by banks.

Further work with the banks is continuing to ensure that they meet the needs of non-traditional sectors, such as the technology and other emerging sectors. Enterprise Ireland is working with the banks to develop propositions for exporters and technology companies that are suited to different stages of growth and encouraging them to adopt cashflow lending as opposed to the asset backed approach that has been the norm in recent years. Knowledge sharing between EI and the pillar banks is on-going, including reciprocal secondments, sector briefings, and trade mission involvement.

Furthermore, the Development Capital Fund Scheme announced as a central recommendation in the Action Plan for Jobs will assist in increasing the availability of risk capital and closing the 'equity gap' experienced by SMEs seeking risk capital in excess of €2m. This Fund was launched in March and a competitive call for expressions of interest was launched on 12 April 2012.

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