Call to ring-fence €500m SME fund

A substantial proportion of the €500m being made available by the Strategic Banking Corporation of Ireland — the State’s new ‘SME Bank’ — needs to be put into the hands of alternative funding providers, rather than the domestic pillar banks for the project to work, it has been claimed.

Call to ring-fence €500m SME fund

The Irish arm of Bibby Financial Services — one of the world’s leading SME funders — has, as part of its pre-budget submission, called on the Government to “ring-fence” a substantial amount of the initial €500m for alternative lenders, who should then be required to distribute the money directly to Irish-based SMEs.

According to Bibby Ireland, without such management, the money — which is from the European Investment Bank, the former National Pension Reserve Fund and Germany’s State-owned development bank, KfW — could all be allocated to just Ireland’s two pillar banks, Bank of Ireland and AIB, “without any guarantees that these institutions will then pass this funding on to SMEs”.

“The problems faced by SMEs in accessing credit has been well-documented. Our proposals offer practical and implementable solutions to overcoming the obstacles which our SMEs can encounter,” said Bibby Ireland managing director, Ronan Horgan.

“The ESRI recently commented that SMEs are too reliant on bank funding products. SMEs must be top of the queue to benefit from the funding at the disposal of the State’s new ‘SME Bank’ This must be a number one priority for Government. Allowing alternative funding providers to play a role in this process is key to ensuring SMEs have a wider range of sources when seeking funding,” he added.

The SBCI fund has been long awaited by Ireland’s small business community, Mr Horgan said. He added that broadening the lender base would send “the clearest signal, yet, that Government is serious about promoting this sector.”

Bibby also wants the remit of the Credit Review Office widened to allow it to advise SMEs on wider funding options available.

“The Credit Review Office, Enterprise Ireland and accountancy associations like the CPA are well-positioned to bridge existing information deficits,” he said.

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