Niall Collins (Limerick County, Fianna Fail)
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60. To ask the Minister for Finance his views on the increase in SME loan refusals by banks per the latest industry data (details supplied); and his further views on the lack of alternative sources of finance available to small businesses and the continued high cost of borrowing here compared to other European countries. [29398/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy will be aware that my Department conducts a biannual SME Credit Demand Survey. This survey series, currently being conducted by Behaviour & Attitudes, is the most comprehensive survey of SME credit demand in Ireland, covering over 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, and in all regions are included.

The latest survey which can be found here  indicates that the majority of credit requests continue to be approved fully with 84% of credit applications (excluding 'still pending') approved or partially approved.  The current rate of decline stands at 15% of all applications. 

The Central Bank of Ireland's most recent SME Market Report for the second half of 2016 also shows that rejection rates for credit applications by SMEs and loan/overdraft rejection rates are in line with euro area averages.  This report can be found here:

In relation to borrowing costs, the most recent published Department of Finance SME Credit Demand Survey, reports only 1% of the SMEs that did not seek credit stated this was because it was too expensive to borrow. 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.

The Government remains committed to the SME sector.  I can assure the Deputy that my Department, working with other relevant Departments and Agencies such as the Credit Review Office, will continue to advance policies to support and monitor the availability of both bank and non-bank credit so as to ensure that viable Irish SMEs have sufficient access to finance.