Niall Collins (Limerick County, Fianna Fail)
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165. To ask the Minister for Finance his views on the latest EIB group survey on investment and investment finance published on 10 April 2017 and the way in which firms here were the most concerned with regard to Brexit having a negative impact at over 40%. [24077/17]

Niall Collins (Limerick County, Fianna Fail)
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166. To ask the Minister for Finance his views on the latest EIB group survey on investment and investment finance published on 10 April 2017 and the way in which SMEs here face higher funding costs and greater collateral demands than most EU member states while also having the most constraints for companies seeking external funding. [24078/17]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 165 and 166 together.

I would draw the Deputy's attention to the fact that while according to the latest EIB Group Survey, 13% of firms in Ireland can be considered finance constrained, Ireland does not have the highest proportion in the EU as reported in the same survey.

I acknowledge that SMEs are concerned about the negative impact of Brexit on their business, my Department’s biannual SME Credit Demand Survey found that 57% of SMEs believe that Brexit will have a negative impact on their business. Also, a recent survey by the Department of Jobs, Enterprise and Innovation “Brexit – the view of Irish SMEs” found that 51% of SMEs felt that Brexit had an impact on their business.

The Government has introduced a number of measures in Budget 2017 in response to Brexit and is committed to the establishment of a “rainy day fund” and a new lower debt to GDP target to ensure the public finances can withstand any negative impacts from Brexit and other economic shocks. In terms of specific measures for SMEs the 2017 Action Plan for Jobs contains 20 specific actions to mitigate against the likely impact of Brexit for Ireland.

Also, 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, and is currently examining a number of Brexit mitigation measures.

In terms of borrowing costs, the most recent published Department of Finance SME Credit Demand Survey, covering the period April to September 2016, reports only 1% of the SMEs that did not seek credit stating this was because it was too expensive to borrow. The same survey also showed that, among those SMEs with outstanding loans, the average claimed cost of credit across all outstanding loans was 3.2% down from 4.8% in March 2016. When asked for the reason SMEs did not borrow, 86% of firms reported they did not need to borrow.

Notwithstanding these results the Government is conscious that the SME credit market is highly concentrated. In order to help address this issue, the Government established the Strategic Banking Corporation of Ireland (SBCI). Its purpose is to make sustainable, flexible and appropriately priced finance available to viable Irish SMEs and support investment in them that encourages growth and facilitates employment across the whole country.

The SBCI uses an on-lending model; this means it does not lend directly to SMEs, rather it lends through partner financial institutions known as on-lenders. The SBCI currently has eight on-lending partners, three bank and five non-bank. The SBCI is seeking to broaden its distribution capability and market coverage by adding new on-lenders and working to develop innovative products, thereby serving to drive competition in the SME finance market.