‘Banks lending very little of €350m EIB funds set aside for SMEs’

VERY little of the much-heralded €350 million in funding set aside for small and medium sized enterprises (SMEs) in Ireland by the European Investment Bank (EIB) has been lent by the banks to date, a Dáil Committee was told yesterday.

‘Banks lending  very little of €350m EIB funds set aside for SMEs’

Representatives of Chambers Ireland – the body’s chief executive, Ian Talbot and Waterford Chamber chief, Michael Garland – told the Joint Oireachtas Committee on Enterprise, Trade and Employment that while it is very difficult to obtain statistics on how lending practices to SMEs have changed since the new funding initiative was announced, earlier this year, it is their “sense” that “not a lot of it is going out yet”.

“We don’t know the number of loans given under the EIB funding, but we haven’t got a sense that a lot is flooding out the door,” Mr Talbot added.

Mr Talbot did say, however, that while some SMEs have been struggling to get lending, demand amongst them has lessened on a Europe-wide basis. He said that a two-tier system has emerged in the Irish banking sector – with some actively lending and others not lending at all.

Chambers Ireland has also welcomed the code of conduct for business lending to SMEs, which was introduced by the Government last March to make banks’ decisions regarding loan applications more transparent; saying it has already had a positive effect on small business sector morale.

Mr Talbot said that much of the EIB fund is for forward-looking development projects; while many Chambers Ireland clients are looking for short-term financing, “which is hard to get”. He added that implementation of the NAMA (National Asset Management Agency) legislation would remove a lot of indecision and uncertainty surrounding lending confidence amongst the banks.

But, Mr Garland added that banks need to take extra risk on SME lending policies immediately, but said that they needed to be encouraged to do so by the Government.

Also appearing before the Committee’s morning session, Enterprise Ireland chief executive, Frank Ryan said that while companies across all sectors are facing difficulties in accessing financing, there does exist the opportunity to access part of the €350m fund, depending on their borrowing requirements.

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