Lenihan unveils details of new €12bn SME loan fund

Finance Minister Brian Lenihan has today unveiled plans for €12bn in new lending to businesses over the next two years.

The funding is to be made available by Bank of Ireland and AIB, especially from this autumn when Lenihan says the recovery will be well underway.

A report from the Credit Review Office set up by the Government also says while there are issues in banks, there is no evidence of a policy of refusal of credit to businesses.

The Irish Small & Medium Enterprises Association (ISME) has cautiously welcomed the announcement, but is concerned that the funding may not be made available across all viable businesses in all sectors.

Commenting on the announcement, stated, “

"Today’s announcement must be accompanied by a commitment to treat all enterprises fairly and an acknowledgement of the inter-dependence within the SME sector," said ISME chief executive, Mark Fielding.

"The domestic trading entrepreneur must not be abandoned by either Government or the banks, as those companies who trade solely in the domestic marketplace are a vital cog in the economy and deserve a parity of esteem with exporters and multinationals.

Fielding also voiced concern at how this additional lending would be monitored.

"The banks will attempt to ‘slither’ out of their commitments on SME lending," he said.

"Their total lack of honesty on the Nama project, for instance, and their generally deplorable treatment of the SME sector, would raise serious concerns about their bona fides. The Government must insist on Central Bank oversight to ensure that banks honour their commitments.

"This is an issue that we cannot afford to get wrong, as the future of thousands of SMEs hangs in the balance.

"The Government must demand that the lending is extended to all SMEs and that the Central Bank monitors and measures the initiative to ensure that the lending is targeted at those viable businesses that require finance."

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