WORK on a Government backed loan guarantee scheme for small business should be “finalised very shortly”, according to Minister for Enterprise, Trade and Innovation Batt O’Keeffe.
Addressing the Small Firms Association annual conference in Dublin Castle, Mr O’Keeffe said “detailed work is under way” on a plan to support the distressed small business sector. “It was important that any scheme “complements rather than substitutes” the main banks’ lending commitments, he said.
The minister was reacting to a demand for some form of Government guarantee to be introduced by the SFA chairman Aidan O’Boyle. Such a scheme is needed to throw a life-line to struggling small companies hit by close to 1,000 closures in 2010.
It was time for the Government to “step up to the plate” and deliver a loan guarantee package “to ensure that credit flows once again to small business,” Mr O’Boyle said.
Unless the lending risks to the banks were reduced by such a scheme, he warned “many small businesses will not survive”.
Mr O’Keeffe said “your chairman has called on the Government to step up to the plate and set up a Government-backed loan guarantee scheme.
“I am pleased to tell you that officials in my department and the Department of Finance are looking at options for a loan guarantee scheme,” the minister said.
“Detailed discussions on how this can be achieved are under way and I hope they can be finalised very shortly,” he said.
The scheme would target the market failure to provide credit to commercially viable businesses because of insufficient collateral and information deficits despite an ability to repay.
Ireland is one of the few nations in the European Union “that does not have some form of loan guarantee scheme”, he said.
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