Tom Fleming (Kerry South, Independent)
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278. To ask the Minister for Finance in view of survey results by ISME that 57% of companies which had applied for loans were refused, if he will significantly increase the target for lending in 2015 and consider options to make more money available to small businesses; and if he will make a statement on the matter. [4876/15]

Michael Noonan (Limerick City, Fine Gael)
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I assume the Deputy is referring to the ISME Q3 2013 survey where it was reported that 57% of companies who applied for funding were refused credit by their banks. The Deputy may be interested to note that the ISME Q4 2014 survey reports a refusal rate of 38%.

The SME Credit demand survey April-September 2014 conducted by Red C on behalf of my Department is the most comprehensive survey of SME credit demand in Ireland, covering 1,500 respondents and involving over 5,000 direct calls to SMEs. This survey reports the refusal rate for this period at 14%.

As the Deputy may be aware, 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 to date. Further details are available at

The Government recognises that small businesses 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.

Since the beginning of 2014 the focus has shifted towards the collation and examination, on a monthly basis, of more granular data on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector. 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, particularly lending to the domestic market, and have put on record their commitment to the SME sector. Both banks have recently reported increased year on year sanctioning activity for lending 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 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 and also ensuring that credit provided to SMEs meets their needs rather than the needs of those who offer the credit. The SBCI, from available funding of some €800 million initially, will provide a more extensive range of financing than is currently offered in Ireland such as loans of longer duration that encourage and enable growth of our SMEs. The SBCI will have a lower cost of funding and this benefit must be passed onto SMEs. The SBCI is working with its first lending partners to provide initial funding to the SME sector by the end of 2014. The initial products will be launched in Q1 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.

- 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 Government remains committed to the SME sector and sees it as the key engine of ongoing economic growth. Consequently 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 with a view to taking appropriate actions as warranted to ensure that SMEs in Ireland have the opportunity to reach their full potential in terms of growth and employment generation. In this context, the Action Plan for Jobs 2015 includes a dedicated chapter and associated integrated set of actions to support the financing for growth in the SME sector.