Work under way on loan guarantee scheme for small firms - Minister O’Keeffe

16 September 2010

Detailed work is under way on a Government-backed loan guarantee scheme for viable small businesses, the Minister for Enterprise, Trade and Innovation, Batt O’Keeffe TD, told the Small Firms’ Association’s annual conference in Dublin today.

Minister O’Keeffe said it would be important that any scheme ‘complements rather than substitutes’ the main banks’ lending commitments under the recapitalisation package.

‘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.

‘Detailed discussions on how this can be achieved are under way and I hope they can be finalised very shortly,’ said Minister O’Keeffe.

The scheme would target market failure in small business lending when commercially viable businesses fail to get credit because of insufficient collateral and information deficits despite having demonstrated an ability to repay.

Over 2,000 loan guarantee schemes operate in almost 100 countries.

‘Ireland is one of the few nations in European Union that does not have some form of loan guarantee scheme.

‘Getting credit flowing to small businesses is vital to our economic recovery,’ said Minister O’Keeffe.

He said other initiatives to support businesses include the extension of the Corporation Tax Exemption for start-up firms, the Employer Job (PRSI) Incentive Scheme and the €1.4 million pilot management training fund.

Minister O’Keeffe said he is finalising proposals to ensure the County Enterprise Board structure is properly configured to help small businesses play their part in our recovery.

‘I am also looking at how we can access other sources of funding to support small businesses including the €400 million available under the LEADER programme,’ said Minister O’Keeffe.

He pointed out that Ireland is regaining competitiveness.

‘We have recently seen declines and realignment in salary levels in the public and private sectors.

‘We are seeing lower business costs which are easing pressures on the business sector.

‘Wage, energy, capital and commercial rental costs have all dropped and we are reducing the administrative burden by driving better regulation, cutting out paperwork and making better use of online services.

‘We aim to save €500 million over the next two years by reducing the administrative burdens in company law, health and safety and employment legislation,’ said Minister O’Keeffe.

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