Written answers

Thursday, 18 October 2018

Department of Jobs, Enterprise and Innovation

Small and Medium Enterprises Supports

Photo of Eamon ScanlonEamon Scanlon (Sligo-Leitrim, Fianna Fail)
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43. To ask the Minister for Jobs, Enterprise and Innovation the way in which her Department is assisting small and medium enterprises faced with escalating insurance costs and commercial rates, access to banking services and the cost of credit; and if she will make a statement on the matter. [42565/18]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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Supporting our small and medium sized enterprises is a cornerstone policy for the Government and my Department. SMEs are vital to Ireland’s continuing recovery and all active enterprises in the State remain critically important.

The Government recognises that rising insurance costs for enterprise are an issue. For this reason, the Minister for Finance established the Cost of Insurance Working Group in July 2016. In terms of my own Department’s work, in December 2017 and in September 2018, on foot of a recommendation from this Working Group we published the First and Second Reports of the Personal Injuries Commission. The work of the Personal Injuries Commission, the implementation of the Report on the Cost of Motor Insurance and the complementary work of the Cost of Insurance Working Group should contribute to a better functioning personal injury litigation system and should also help to deliver reduced premiums for businesses.

In terms of commercial rates, the levying and collection of rates is a matter for each individual local authority. The Department of Housing and Planning has developed legislative proposals to modernise and consolidate the legislation governing commercial rates. Among the measures included in the General Scheme of the Bill are provisions to allow a local authority to introduce rates alleviation schemes to support the implementation of policy objectives.

In terms of access to finance, I understand that finance is critical to the success of business and providing appropriate and accessible finance to business is one of my top priorities.

As SMEs are more likely to be indigenous they have a higher reliance on funding from the Irish banking system than larger businesses or multinational enterprises. The cost of finance for Irish SMEs is higher than the European average according to the European Central Bank’s SAFE study. One explanation for this interest rate differential is that the SME lending market in Ireland continues to be highly concentrated. According to the latest Central Bank SME Market Report the combined market share of new lending of the three main banks was 82%. It is in this context that my Department has developed some important SME-specific initiatives to improve availability of affordable finance for SMEs.

The Strategic Banking Corporation of Ireland (SBCI) was established in 2014. It provides low cost, flexible finance to SMEs through its seven on-lending partners. By the end of December 2017, €920 million of SBCI supported lending has been provided to 22,965 Irish SMEs, operating across all sectors of the Irish economy and in all regions of the country, supporting 119,393 jobs.

The Credit Guarantee Scheme (CGS) has been operating since 2012 to encourage lending to commercially viable SMEs which, under normal lending criteria, are unable to obtain new or additional facilities from their bank. Following a review of the CGS, a new scheme which incorporates many positive changes, including an increase in the guarantee from 75% to 80% is being rolled out by the banks this year. In the lifetime of the Credit Guarantee Schemes to the end of June 2018, approximately €93.4 million in credit guarantee scheme facilities were sanctioned for 587 SMEs, resulting in 3,666 jobs being created or sustained.

Microfinance Ireland (MFI) was established to provide small loans from between €2,000 to €25,000 to start ups and established businesses. Since its establishment to the end of June 2018 MFI has approved loans totalling €25.4m that have helped to create or sustain 4,277 jobs so far.

I launched the €300 million Brexit Loan Scheme in March 2018 this year. This scheme will be available to eligible businesses with up to 499 employees. The scheme offers a competitive interest rate of 4% or lower. Loans will range from €25,000 to €1.5 million, with a loan term of up to three years.

The Future Growth Loan Scheme is currently being developed by my Department and the Department of Agriculture, Food and the Marine (DAFM) in partnership with the Department of Finance, the Strategic Banking Corporation of Ireland (SBCI) and the European Investment Fund (EIF). Through a counter-guarantee from the EIF, the Future Growth Loan Scheme will leverage €62 million of Exchequer funding, of which 60% will be provided by my Department and the remaining 40% will be provided by the Department of Agriculture, Food & the Marine over a five-year period to make a fund of up to €300 million available to eligible Irish businesses for terms of 8-10 years. Finance provided under the scheme will be competitively priced and have favourable terms, including the interest rate, with loans up to €500,000 unsecured. The scheme is expected to launch in early 2019.

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