Pearse Doherty (Donegal, Sinn Fein)
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139. To ask the Minister for Finance if his attention has been drawn to difficulties potential new businesses are having in accessing new mortgages and loans on mixed use properties from the banking sector despite apparent credit worthiness; the approach of the State owned banks to such applications; the details of any specific products they have for such potential start-ups; and if he will make a statement on the matter. [38131/16]

Michael Noonan (Limerick City, Fine Gael)
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I am not familiar with cases where issues have arisen related specifically to lending practices for new businesses secured by mixed-use property. However, I am aware that most banks will consider that a mixed-use property is an acceptable form of security for business loans, except where any particular use is likely to restrict the Bank's ability to realise its security in the event of borrower default. It has also been brought to my attention that there are regulatory challenges to overcome in the implementation/fulfilment of mixed use lending where the customer is using the premises for both business and personal residential requirements.

AIB have informed me that, at present, where the bank receives a request to facilitate mixed-use lending, the bank would investigate with the customer to see if the folio for such mixed use properties could be split which would require two separate loans (Business Loan for the business part of premises and a Mortgage for the residential part of the premises). The bank understands that this type of split can be necessary in such mixed use lending cases, to meet the different regulatory obligations arising under the Mortgage Credit Regulations 2016, SME Lending Regulations 2015 and the Consumer Lending/arrears regulation (CPC, CCMA).

Permanent TSB has advised me that the bank offers business loans to both new and established small business enterprises to fund trading activities, and that the loans may be secured or unsecured. The Bank offers potential new customers the opportunity to discuss business plan funding requirements in order to determine the most suitable funding options and funding structures given the individual circumstances of the business. PTSB have also advised that where the overall use of the property is such that the loan would be classified as a commercial real estate investment loan, the Bank does not currently provide new lending facilities, as it is restricted from this type of lending under its agreed restructuring plan with the European Commission.

As the deputy will be aware, my department is involved in a number of initiatives to assist in the supply of credit to new businesses starting out. Where an entrepreneur has had a difficulty in securing a loan from a bank, there are a large number of options available to them. For example the Credit Review Office which 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. Also, 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.