Niall Collins (Limerick County, Fianna Fail)
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62. To ask the Minister for Finance the progress on the programme for Government commitment to investigate the German Sparkassen model for the development of local public banks that operate within well defined regions; and the key elements under this model that facilitate accessible lending to enterprises and promote SME growth. [22641/17]

Michael Noonan (Limerick City, Fine Gael)
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The Programme for Government contains a commitment to thoroughly investigate the Sparkassen model of local public banks that operate within well-defined regions. The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs (DAHRRGA) is the lead Department in respect of this commitment. DAHRRGA undertook a consultation process, engaging with stakeholders and interested parties, which finished at the end of March of this year. As part of this consultation process, meetings were held with Sparkassen, Irish Rural Link and the Public Banking Forum of Ireland.

Officials from my Department are assisting DAHRRGA to prepare a report for the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs and myself setting out the findings and conclusions of this investigation into the key elements of the Sparkassen model of local public banking as it relates to SMEs. It is anticipated that this report will be completed by mid-year.

As the Deputy will be aware, SMEs can access lower cost, flexible finance from the Strategic Banking Corporation of Ireland (SBCI). To the end of December 2016, the SBCI has lent €544 million to 12,593 SMEs. The SBCI’s goal is to increase the availability of funding to SMEs at a lower cost and on more flexible terms than has been available in recent times on the Irish market. The SBCI uses an on-lending model; this means it does not lend directly to SMEs. At present, the SBCI has 3 bank and 5 non-bank on-lenders. The SMEs who received SBCI finance are from a variety of business and economic sectors. More than 80% of loans are for investment purposes and the average loan size is €43,200. There is a broad regional spread of the SMEs supported, with 84.8% of them based outside Dublin.

The Deputy may also wish to note that there are already significant Government measures to support the financing needs of SMEs.  As well as the SBCI, there is the Supporting SMEs Online Tool, the Credit Guarantee Scheme, the Microenterprise Loan Fund, Local Enterprise Offices and the Credit Review Office. 

The Supporting SMEs Online Tool is a cross-government initiative. By answering eight simple questions, SMEs will receive a tailored list of available Government supports to suit their needs.  The Supporting SMEs Online Tool is available atwww.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.  Further information is available on the Department of Jobs, Enterprise and Innovation website.

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

The Credit Review Office (CRO) is another government initiative that helps SMEs 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. This is a strictly confidential process between the business, the Credit Review Office and the bank. The CRO overturns more than 50% of appeals it receives. Further details are available at www.creditreview.ie.

The Deputy may rest assured that it is a key Government strategy to ensure State supports enable the growth of Irish SMEs by facilitating access to credit and promoting investment in SMEs.