Terence Flanagan (Dublin North East, Fine Gael)
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To ask the Minister for Finance the action he is taking to address the level of rejections for loans and overdrafts to small and medium sized businesses; and if he will make a statement on the matter. [39061/12]

Michael Noonan (Limerick City, Fine Gael)
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The banking system restructuring plan creates capacity for the two Pillar Banks, Bank of Ireland and AIB, to provide lending in excess of €30 billion from the period 2011-2013. SME and new mortgage lending for these banks is expected to be in the range of €16-20bn over this period. This lending capacity is incorporated into the banks’ deleveraging plans which allow for repayment of Central Bank funding through asset run-off and disposals over the period to 2013. 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 Credit Review Office (CRO) reviews decisions by the pillar banks to refuse, reduce or withdraw credit facilities (including applications for restructured credit facilities) from €1,000 up to €500,000. The Credit Review Office is overturning 60% of the decisions referred to them, supplying €6.9m of credit, supporting 683 jobs in the SME sector. I would appeal to SMEs who have been refused credit by banks to avail of the services of the CRO.

The Deputy should be aware that the Microenterprise Loan Fund Act provides for a scheme which will facilitate up to €40million in additional lending to microenterprises over the next five years. Furthermore, the Government is in the process of facilitating up to €150m per annum of additional credit through the Temporary Partial Credit Guarantee Scheme, designed for SME’s who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.