Dara Calleary (Mayo, Fianna Fail)
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To ask the Minister for Jobs, Enterprise and Innovation his policy on improving access to credit for businesses; and if he will make a statement on the matter. [37418/12]

Richard Bruton (Dublin North Central, Fine Gael)
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Improving access to credit is a priority on the business agenda and is an issue which the Government is addressing in a comprehensive and co-ordinated manner. To address the issue my Department is currently in the process of introducing two targeted schemes to support an additional flow of credit into the economy namely the Microenterprise Loan Fund and the Temporary Partial Loan Guarantee Scheme.

The Microenterprise Loan Fund will improve access to credit for microenterprises and facilitate the growth and expansion of viable businesses from all industry sectors across the country, which have been refused access to credit from the banks. The Fund has a significant entrepreneurship focus to encourage all would-be entrepreneurs, including those who are unemployed. It will also add value to other Government schemes of support for entrepreneurs and unemployed persons, such as the Back to Work Allowance or the Seed Capital Scheme.

Support will be in the form of loans for up to €25,000, available to start-up, newly established, or growing microenterprises, with viable business propositions, that do not meet the conventional risk criteria applied by banks. The potential viability of the business proposal will be the dominant factor in all credit decisions. The €10m allocation, supplemented by €15m borrowing from other sources will generate €40m in additional lending for microenterprises. It will help the establishment and growth of microenterprises and create over 3800 jobs at a cost per job of approximately €3k per job over the 5 year horizon.

The second initiative being pursued by my Department is the Temporary Partial Loan Guarantee Scheme. This is being introduced for SMEs who, because of lack of collateral or because of the sector they operate in, face difficulties in accessing traditional bank credit. Commercially viable, well performing micro, small and medium enterprises that have a solid business plan and a defined market for their products or services, and demonstrating their ability to repay the loan is the target of this scheme. The minimum permissible loan value will be €10,000 and the maximum will be €1,000,000. The Guarantee Scheme will facilitate up to €150 million of additional lending per annum for SMEs. The benefits forecast to arise from this intervention in each year of operation, assuming €150 million of additional lending, include: over 1,000 jobs created and over €25m of exchequer benefits in tax revenues and welfare cost savings.

In addition to these initiatives the Innovation Fund Ireland (IFI) and Development Capital Schemes are helping Irish companies access credit in the current difficult environment. IFI is a key pillar of support for dynamic new industries, and investments. The Fund facilitates job creation in innovative export focused sectors as well as providing a return to the exchequer over time. €250 million was made available to the Fund to make commitments.

Under the Scheme, Enterprise Ireland requires Venture Capital fund managers to establish an office in Ireland and to invest the equivalent of the Enterprise Ireland commitment in Irish companies or companies with significant operations in Ireland. Aside from these conditions, Enterprise Ireland invests on the same terms as the private sector sharing the risk and the rewards. A second call for proposals was issued earlier this year following the announcement of the first investment under the first call for expressions of interest. Application under this are currently being evaluated and decision are expected shortly. The Development Capital Scheme has been developed to complement the existing suite of financial supports offered by Enterprise Ireland (EI) to business.

Longer-term investment capital is currently not readily available to Irish growth focused companies in either the form of debt or equity, and there is very limited private equity funds/debt available to innovative SMEs. This situation has resulted in an equity gap, which is constraining the development of a key cohort of established Irish growth companies.

The exchequer funding requirement for this scheme is €50m over 10 years. It is proposed that EI will commit €25m each to two funds which will leverage a further €50m each from the private sector. Fund investments supported by EI under this scheme will be made with the State sharing equally in the risks alongside investors. The proposed scheme will focus on funds that provide equity or quasi debt of between €2m to €10m per investment although it is likely that many investments would be in the €2m to €5m range. The Scheme was launched on the 12 April 2012 and a call was issued by Enterprise Ireland for ‘expressions of interest’, from fund managers, with a closing date of 16 July 2012, for receipt of expressions. The Scheme is currently under review.