Written answers

Thursday, 4 December 2014

Department of Finance

Credit Availability

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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57. To ask the Minister for Finance if he is satisfied regarding the availability of credit to the hospitality sector with particular reference to the need to ensure that the hotel industry has adequate access to credit as required; and if he will make a statement on the matter. [46639/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Government recognises that small businesses, including those in the hospitality sector, play a central role in the sustainable recovery of the Irish economy. To facilitate this, Government policy since 2011 has been focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.

2013, the year of The Gathering, was the best year for inbound tourism since 2008. Tourism delivers income and jobs in every town and city and to every corner of our country. The abolition of the air travel tax last year will result in over one million extra passengers through additional capacity on many existing routes, as well as the introduction of new services. The reduced 9% rate of VAT on tourism related activities has been a great success and there are now an extra twenty three thousand employed in the sector since mid-2011. In addition, as I announced in the Budget 2015 speech, I increased the amount of finance that can be raised by a company under the Employment and Investment Incentive to€5 million annually subject to a lifetime maximum of €15 million and I also increased the required holding period for shares from 3 to 4 years. With specific regard to the hospitality sector, I extended the inclusion of hotels, guest houses and self-catering accommodation in the scheme by a further 3 years.

Some recent joint banking/industry research has revealed that a majority of Irish hoteliers are optimistic about the medium term outlook for the sector with (67%) saying that the tourism sector will improve within the next three years. A total of 71% believe the financial performance of their own properties will improve within the same time-frame. The research also revealed that 54% of hotels saw turnover increase in 2012, with 26% saying it decreased. 

Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets.In this context, both banks recognise the need to increase business lending in the period up to 2016 and have put on record their commitment to the SME sector. 

My Department has been involved in a range of initiatives to encourage access to credit for small and medium sized businesses, and the SME State Bodies Group, which includes representation from Fáilte Ireland, provides a forum for the development and implementation of policy measures to enhance SMEs' access to a stable and appropriate supply of finance. 

Some of the main policies introduced by this Government to encourage access to credit for small and medium businesses include:

- The Supporting SMEs Online Tool, a cross-government initiative, was launched in May 2014. On answering 8 simple questions, the small business will receive a list of available Government supports.  The Supporting SMEs Online Tool is available at .

- The Strategic Banking Corporation of Ireland has been established as a means of ensuring that SMEs are provided with sufficient finance for growth.  The SBCI, from available funding of some €800 million initially, will provide a more extensive range of financing than is currently offered in Ireland. A full roll-out will occur from January 2015 with traditional bank lenders and importantly, new credit providers from beyond the traditional bank sector being involved which means SMEs will benefit from greater choice as well as more funding.  More information on the SBCI can be found on .

- The Credit Guarantee Scheme encourages additional lending to small businesses by offering a partial Government guarantee to banks against losses on qualifying loans to eligible SMEs. My colleague, the Minister for Jobs, Enterprise and Innovation, will shortly bring legislation to the Oireachtas which enable the development of a more flexible Credit Guarantee Scheme with longer duration and more products and providers included.

- The Microenterprise Loan Fund, administered by Microfinance Ireland, provides loans of up to €25,000 to small businesses who have been refused credit by commercial banks. Microfinance Ireland works in partnership with the Local Enterprise Offices nationally to administer this fund. This scheme is currently being reviewed by the Department of Jobs, Enterprise and Innovation with a view to making proposed changes to enhance its effectiveness.

- The Credit Review Office helps SME or Farm borrowers who have had an application for credit of up to €3 million declined or reduced by either Bank of Ireland or Allied Irish Banks, and who feel that they have a viable business proposition.They also examine cases where borrowers feel that the terms and conditions of their existing loan, or a new loan offer, are unfairly onerous or have been unreasonably changed to their detriment.This is a strictly confidential process between the business, the Credit Review Office and the bank. The Credit Reviewer John Trethowan and his team have overturned 55% of the refusals that have been appealed to the Office.  Further details are available at

The Department of Finance, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit on both a macro and sectoral basis in order to ensure that sufficient access to finance is available to facilitate participants in the SME sector to reach their full potential in terms of growth and employment generation.  In this context the forthcoming Action Plan for Jobs 2015 will include a dedicated chapter and associated integrated set of actions to support the financing for growth in the SME sector. 


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