Bernard Durkan (Kildare North, Fine Gael)
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50. To ask the Minister for Finance the extent to which he expects to encourage the banking sector to meet the requirements of small and medium sized industry, the retail or commercial sector; and if he will make a statement on the matter. [10844/16]

Bernard Durkan (Kildare North, Fine Gael)
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55. To ask the Minister for Finance the degree to which his Department monitors the working capital requirements of the various manufacturing and services sectors on an ongoing basis with a view to identifying particular deficiencies; if a decision has been made to address specific areas arising therefrom; and if he will make a statement on the matter. [10849/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 50 and 55 together.

As the Deputy is aware, small and medium sized businesses play a central role in the sustainable recovery of the Irish economy. To facilitate this, Government policy is focused on ensuring that all viable SMEs from every sector have access to an appropriate supply of credit from a diverse range of bank and non-bank sources. Officials from my Department regularly meet representatives from the Small Firms Association, Irish Small and Medium Enterprises Association and Chambers Ireland to discuss issues around access to finance and these engagements help inform the development of policy on SME credit and lending.

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, including lending to the SME sector. My Department collates and examines, on a monthly basis, 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. In addition, AIB and Bank of Ireland meet my officials, and those of the Credit Review Office, on a quarterly basis to keep them abreast of issues pertaining to the SME sector. This facilitates the Department and the Credit Review Office in monitoring progress against agreed annual SME lending plans and ensuring that new lending to SMEs continues to increase as a percentage of total sanctioned lending. 

My Department has been involved in a range of initiatives to encourage access to credit for small and medium sized businesses. 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 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 www.supportingsmes.ie.

- The Strategic Banking Corporation of Ireland has been established as a means of ensuring that SMEs are provided with sufficient finance for growth. The Strategic Banking Corporation of Ireland (SBCI) is an initiative designed to increase the availability of funding to SMEs at a lower cost and on more flexible terms than have recently been available on the Irish Market. The SBCI does not lend directly to SMEs. It uses a network of lending partners known as 'on lenders' to make its funds available to SMEs. More information on the SBCI can be found on www.sbci.gov.ie.

- 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.

- The Microenterprise Loan Fund, administered by Microfinance Ireland, provides support in the form of loans for up to €25,000, available to start-up, newly established, or growing micro enterprises employing less than 10 people, with viable business propositions. Microfinance Ireland works in partnership with the Local Enterprise Offices nationally to administer this fund (www.microfinanceireland.ie).

- 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 the main 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 and his team have overturned more than 50% of the refusals that have been appealed to the Office.  Further details are available at www.creditreview.ie.

The Government remains committed to the SME sector, as reflected in the recently published Programme for a Partnership Government, and sees it as a key engine of ongoing economic growth. Consequently, my Department and the Credit Review Office, 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 Action Plan for Jobs 2016 includes a dedicated chapter and associated integrated set of actions to support the financing for growth in the SME sector.

In terms of monitoring the requirements for SMEs, the Department of Finance facilitates the biannual SME Credit Demand Survey. The most recent survey, covering the period April-September 2015, shows that 85% of SME credit applications, excluding pending applications, were approved. Working capital requirements were provided as the main reason for applying for bank finance with 48% of respondents stating that they required finance for working capital. When asked about sources of finance for working capital, internal funds/retained earnings were the main finance source of working capital with 63% of working capital coming from this source. Further results from the survey can be found at www.finance.gov.ie. Results from October 2015 to March 2016 are expected shortly.