Bernard Durkan (Kildare North, Fine Gael)
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224. To ask the Minister for Finance if he remains satisfied regarding the extent to which adequate credit facilities continue to be available to the small and medium sized business sector to allow that sector to develop and grow adequately; and if he will make a statement on the matter. [16743/17]

Michael Noonan (Limerick City, Fine Gael)
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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 facilities from a diverse range of bank and non-bank sources.

In line with Action 62 of the APJ 2017, officials from my Department will collate and examine data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.

In terms of monitoring the requirements for SMEs, my Department commissions biannual surveys to ascertain the demand for credit by SMEs.  This survey series, most recently conducted by Behaviour and Attitudes on behalf of my Department, is the most comprehensive survey of SME credit demand in Ireland, covering 1,500 respondents and involving over 6,000 direct telephone calls to SMEs. SMEs of all sizes trading in all sectors, excluding property development and speculative activities, are included.  The survey covers demand for credit from both bank and non-bank sources.

I would draw the Deputy's attention to the most recently published Department of Finance SME Credit Demand Survey covering the April to September 2016, which can be found at www.finance.gov.ie/sites/default/files/20161205%20SME%20Credit%20Demand%20Survey%20April%20to%20September%202016_0.pdf.

The results of this survey show that, when pending applications are excluded, 84% of credit applications to banks were approved or partially approved.  Demand for credit remains subdued and the latest survey shows only 23% of requested bank finance in the previous six months down from 26% in March 2016.

Purchases, replacement or lease of new vehicle/equipment is now provided as the main reason for applying for bank finance with 29% stating this is why they requested bank finance. Working capital/cash flow requirements were provided as the second highest reason for applying for bank finance with 27% of respondents stating that they required finance for this purpose.  When asked about sources of finance for working capital, internal funds/retained earnings were the main finance source of working capital with 73% of working capital coming from this source (up 6%).  The survey also showed continued positive trends in terms of trading performance, profitability and employment.

I am pleased to note that, to the end of December 2016, the Strategic Banking Corporation of Ireland has lent circa €544 million to 12,589 SMEs supporting an estimated 67,150 jobs. These figures represent a significant increase in lending by the SBCI during 2016. The SMEs who received SBCI finance are from a variety of business and economic sectors and are spread across every region of the country. More than 80% of loans are for investment purposes and the average loan size is €43,000. There is a broad geographical spread of the SMEs supported with approximately 85% of them based outside Dublin. The SBCI is using its significant funding capacity, of over €1 billion, to support Irish SMEs investing in and growing their businesses.

Over 32,500 businesses and entrepreneurs used the Government's Supporting SMEs Online Tool in 2016, over three quarters of them using the Online Tool for the first time. The campaign is a cross-governmental initiative developed to help small businesses and entrepreneurs learn the full range of potential Government supports available to them. The Supporting SMEs Online Tool is available at www.supportingsmes.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 Credit Guarantee (Amendment) Act was brought through the Oireachtas in 2016, allowing the scheme to assist more small and medium sized enterprises secure loan finance. In 2017 the Department of Jobs, Enterprise and Innovation will prepare and launch a revised Credit Guarantee Scheme, which will now be operated by the SBCI, to ensure a greater supply of credit for Irish SMEs.

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 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 over 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 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 sectorial basis in order to ensure that sufficient access to finance is available to facilitate indigenous SMEs, to reach their full potential in terms of growth and employment generation.