Rose Conway-Walsh Raises Concerns Over SME Credit Access

My first question to you this morning, Minister, is to ask you to outline the measures that you are taking to ensure that small and medium-sized businesses can access affordable credit and avoid being burdened by the high borrowing costs. Minister, access to affordable credit is a significant barrier for our SMEs who want to expand and grow their market share, and as they try and navigate their way around all of the challenges that they are currently facing, they need access to credit. Thank you. I thank the Deputy for this very important question. I firmly commit to ensuring that small and medium-sized businesses have access to affordable credit. My Department has developed several loan guarantee schemes, the first in 2012, that have enabled participating lenders to offer loans at interest rates below their standard commercial terms. The scheme that is currently open to SMEs is the Growth and Stability Loan Scheme. This is a half a billion euro initiative developed by my Department and the Department of Agriculture, Food and the Marine, underpinned by partial guarantee from the European Investment Group Bank and the Strategic Banking Corporation of Ireland. SBCI also operate the scheme. This scheme offers a long-term loan ranging from €25,000 to €3 million, with terms of up to 10 years to SMEs, farmers, fishers and small mid-caps. Loans of up to half a million are available on an unsecure basis, making finance more accessible for SMEs. Interest rates under the scheme are determined by each participating finance provider in accordance with their own credit policies. However, all rates must reflect the benefit of an EU-backed guarantee scheme and the SBCI's support, ensuring they are below the standard commercial lending rates. In practice, participating lenders offer discounts ranging from 1 per cent to 4.86 per cent compared to their equivalent SME loan rates, making credit more available. A minimum of 30 per cent of the scheme's lending is targeted at environmental sustainability and climate action, with the remainder supporting productivity and competitiveness. Loans for climate-related purposes also benefit from an additional interest rate discount. As of the end of June, 1,930 loans have been approved, amounting to €432 million, both by my department and the Department of Agriculture, Food and the Marine. We are negotiating with the EIB Group and the SBCI on a potential to extend the duration and expand the capacity of the loan. They plan to bring proposals to government within the next three months. Minister, I welcome those initiatives. Last year in 2024, we saw no real growth in Ireland's SME bank debt, which continued low demand from applicants and an overly cautious approach to risk from the banks. SMEs with any form of credit challenge will find it difficult to access credit from the traditional financial institutions, even more so since the departure of Ulster Bank and KBC from the market. These are the sources that most of the small and retail businesses go to to look for credit. Despite what you are saying that you are doing to make credit more accessible for SMEs, a recent report from IBEC revealed that 63 per cent of SMEs still consider the application process to be overly complex and lengthy, and many SMEs do not have the knowledge and the expertise to navigate that over-complicated process of securing finance, even more so now that the banks have automated their application processes and removed all human interaction with local bank bank managers who would have traditionally advised and assisted a struggling applicant. Thank you. First, just to go back to the evidence. If you look at the first scheme that I referenced there, the growth and stability loan scheme, we have at this point of time almost used up the half a billion euro allocation. That obviously demonstrates that SMEs are using it and are taking it down. We also increased the microfinance Ireland loan scheme for smaller SMEs up to 50,000 from 25. At this point in time, it is supporting about 12,000 jobs in the economy. And these have been a succession of schemes further to the Ukraine Guarantee Scheme, further to the Future Growth and Loan Scheme and further to the Brexit Loan Scheme, so there is a huge amount of low-cost finance that has been underway. We are also renegotiating at the moment which we want to extend that half a billion euro, extend its capacity and keep it competitive, and I would also point out that the Department of Finance did a recent survey with SMEs and only 6% of them cited the cost of finance as an issue in terms of getting support. So the other point I really want to make is that we are really reducing the conditionality across all schemes to make it easier for SMEs to go through the application process, because that is very much the forefront of my mind in doing things simpler, lighter and faster. Thank you, Minister. And I welcome that, Minister, and I think the problem is, and sometimes because so many of these systems now are automated, you know, if somebody does not have an absolute clear record, and there can be many reasons for that that are explainable, that one time you could go in and you could sit down with the bank manager and you could say, this is the reason that that happened, or whatever, and you could come to a situation where an agreement is found where people have, you know, good credit worthiness as well. So I think that is something that needs to be looked at. Also just in terms of the length of time that it can take to draw down credit as well. And I wonder, is there any analysis done on, you know, sometimes you find it's a bit like with other grants as well, that one cohort of people, that all of the grants are drawn down by one cohort of people, but that there's a cohort of people like that would be coming into our constituency offices and businesses, and that are finding it very difficult. So I think we need to be conscious of that, as we ensure to bring all businesses with us and to ensure the sustainability of all businesses going forward. Thank you, Cahirlough, and obviously I'm very happy to work in that regard because the critical thing I'm trying to do is to make these supports available to our SMEs and our family businesses that really employ two-thirds of people right throughout our economy. I'm very aware that your average SME doesn't have a finance director or a HR director, a lot of the great work is done right around the kitchen table, and that's why we're really working with the Centre of Excellence in Enterprise Ireland, with those who craft these schemes, that we're reducing the red tape administration burden, and particularly for some of the lower scale grants, some companies, be it on digitalisation, be it on sustainability supports, you know, grants can be under €10,000, you know, we should be able to turn them around in 24 hours. That's my target to the agencies, and we're working to deliver that. And there's other methodologies that you can bring in to get efficiencies and ensure that you're really supporting them at the forefront. And our cost of doing business advisory form now is working with a lot of the regulators and their interoperability among the sectors, and what they're asking from different applicants has already been asked in some other areas, and we want to really get a floor under that as well, and reduce the administrative burden on that. Thank you Deputy.