Niall Collins (Limerick County, Fianna Fail)
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82. To ask the Minister for Finance following the recent publication of Costs of Doing Business in Ireland 2016, which reported that new businesses are paying 80% more on interest rates than the average in the EU for loans, the steps he is taking to facilitate affordable loan credit to small businesses; and if he will make a statement on the matter. [13984/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that I, as Minister for Finance, have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to product interest rates as determined by the banks from time to time. 

It should be noted that in the most recent Department of Finance SME credit demand survey, covering the six month period to September 2015, only 1% of SMEs that did not seek credit said the reason was because it was too expensive to borrow. The same survey notes that, among those SMEs with outstanding loans, the average claimed cost of credit across all outstanding loans is 4.7%.  Further, close to a quarter of SMEs with outstanding loans report a very low cost of credit between 0-2%.

In the latest Central Bank of Ireland report on Trends in Business Credit and Deposits: Q4 2015, the total weighted average interest rate on new non-financial SME loan draw-downs during Q4 2015 was 4.52 per cent. This represents a 58 basis point decline over 2015.  In contrast, the existing stock of Irish SME loans carry a lower weighted average interest rate; recorded at 3.16 per cent at end-Q4.  

This 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.

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 chaired by my Department provides a forum for the development and implementation of policy measures to enhance SMEs' access to a stable and appropriate supply of finance. 

One such policy measure is the Strategic Banking Corporation of Ireland, whose goal is to ensure access to flexible funding for Irish SMEs by facilitating the provision of:

- Flexible products with longer maturity and capital repayment flexibility, subject to credit approval;

- Lower cost funding to financial institutions which is passed on to SMEs;

- Market access for new entrants to the SME lending market, creating real competition.

The Government's aim for the SBCI is to enhance the range and profile of SME finance providers in Ireland.  The SBCI is achieving this by working with existing and new providers to develop specific funding products and by supporting new entrants to the SME lending market through allocating funding to a number of non-bank SME finance providers.  The SBCI is also pursuing its objective of driving competition within the SME funding market through the provision of funding to a broad range of potential lending partners. 

The SBCI publishes results bi-annually. To the end of December 2015, the SBCI has lent just under €172 million to circa 4,600 SMEs. The average loan size was €37,000 and the loans were for a variety of purposes including investment, working capital and refinancing. The SMEs who received SBCI finance were from a variety of business sectors. 85% of the lending was to SMEs based outside of Dublin (West 13%, Midlands 7%, Mid West 14%, South West 19%, South East 11%, Mid East 10%, border region 11%). The SBCI will publish half year results at the beginning of the third quarter of 2016 for the first half of the year.