Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

71. To ask the Minister for Jobs, Enterprise and Innovation the extent to which access to working capital continues to be made available to small and medium-sized enterprises; and if he will make a statement on the matter. [38583/15]

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

This Government has clearly identified SMEs as drivers of innovation, job creation and growth. We have acknowledged that these businesses have a significant role to play in the sustainable recovery that is now underway in the Irish economy.

Since 2011 Government policy has focused on supporting SMEs in accessing an appropriate supply of financing from both bank and non-bank sources. The Action plan for Jobs process has specifically targeted access to finance issues as being central to the welfare of business. A number of key policy initiatives have been developed which are contributing to the evolution of a more robust and effective platform for the financing of SMEs. These include:

- Establishing the Strategic Banking Corporation of Ireland (SBCI) which will provide up to €800m of funds. Up until the end of July almost €45 million worth of SBCI loans have been provided to over 1,600 Irish SMEs. The SBCI has also recently announced a €50m SME finance initiative alongside Finance Ireland which will drive competition in Irish SME lending and further announcements are expected shortly.

- The development and promotion of an innovative SME State Support online tool to provide an individual with a list of the possible government business supports available to their particular business;

- Amending the Credit Guarantee Act 2012 and introducing a more flexible Credit Guarantee Scheme. This includes amending the scheme to provide funding to SMEs whose banks are exiting the Irish market. In addition there will be legislative changes made shortly that will enable the development of a more flexible Credit Guarantee Scheme with longer loan duration, more products and finance providers, rebalance the risk between the State and financial providers to make it more attractive to the latter and flexible pricing provisions.

- The finalisation and publication of the review of Microfinance Ireland (MFI) introduced changes that make it easier for small businesses to access funding directly from MFI.

In addition to the above the Credit Review Office will review applications for credit made by 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, who feel that they have a viable business proposition. The Credit Review Office 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.

As the economy moves into a new phase of growth there is an opportunity to further develop a policy agenda that addresses some of the structural constraints in the financing of the SME sector, such as the need for improved payment practices in Ireland. Trade credit is one of the most widely used sources of funding by Irish firms and the highest in the Eurozone. Trade credit is a crucial component of financing for many SMEs and disruption to the supply chain flow of payments can often be the deciding factor between solvency and bankruptcy.

The economic crisis has presented significant challenges across enterprise in Ireland, but for SMEs in particular the issue of late payments is of critical concern. Late payments in commercial transactions have an adverse effect on businesses by straining cash flow, adding financial costs and fuelling uncertainly for many businesses.

A recent initiative to improve payment performance and improve cash flow between businesses is the launch of the Prompt Payment Code (PPC). These initiatives, together with the late payment legislation, demonstrate the Government’s ongoing drive and commitment to encourage a prompt payment culture in Ireland. Companies providing goods and services need cash flow certainty and are entitled to expect that their payments will be made in a timely manner.

The PPC is about companies demonstrating a real commitment to responsible business practices which in turn leads to achieving competitive advantage in the market place. Government is leading by example and all Government Departments, their agencies and public sectors bodies have signed up to this Code. For the Code to work it is essential that businesses, big and small, make this important commitment to a prompt payment culture in Ireland.

My Department continues to work with other relevant Departments and agencies through the State Bodies Group chaired by the Department of Finance to ensure that appropriate financing for growth options are available to viable SMEs. This will require a clear focus on how best to maximise the benefits to SMEs of the evolving financial landscape in Ireland and the adoption of actions that contribute to developing a more diversified and competitive financial system, capable of financing the growth potential of Irish SMEs.

The Government will continue to monitor that availability of credit through biannual surveys of SMEs to ensure that they can continue to start, scale and succeed from Ireland and that they are in a position to drive our economic recovery and create further jobs.