Robert Dowds (Dublin Mid West, Labour)
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Question 301: To ask the Minister for Jobs, Enterprise and Innovation the sources of finance available to small businesses; and his views on the action the banking institutions are taking to make such finance available to small businesses.. [27973/12]

Richard Bruton (Dublin North Central, Fine Gael)
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Banking policy is the responsibility of my colleague, the Minister for Finance, Michael Noonan TD. Minister Noonan commissioned Mazars to conduct a new survey in April 2012 on the demand for credit by SMEs and I look forward to the publication of this independent report shortly. This report will further enhance the ability of the Government to understand the business environment in which SMEs operate and their relationships with the banks. The results of this survey will be a valuable resource in informing policy decisions in this area and will be of benefit to all stakeholders.

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 cohorts of SMEs. As Mr. John Trethowan stated on Tuesday last in his 8th report, that although 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 a MicroEnterprise Loan Fund and a Partial Credit Guarantee Scheme, thereby supporting 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 adapt to the needs of the non-traditional sectors, such as the technology and 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 to adopt cashflow lending as opposed to the asset backed approach that has been the norm in recent years. Knowledge sharing 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.