Saturday 27 December 2014

SMEs' state lending scheme fails to reach its target

Just €12.7m borrowed out of €450m

Published 18/05/2014 | 02:30

Minister for Jobs, Enterprise and Innovation Richard Bruton. Photo: Frank Mc Grath
Minister for Jobs, Enterprise and Innovation Richard Bruton. Photo: Frank Mc Grath

A €450m government scheme which was introduced to boost jobs and make it easier for small businesses to borrow money has failed miserably – and is meeting only a tiny fraction of its targets.

The Credit Guarantee Scheme – which was launched in October 2012 by Jobs Minister Richard Bruton with Taoiseach Enda Kenny and Tanaiste Eamon Gilmore – was expected to provide an extra €150m a year in lending for small businesses over three years.

However, small businesses only borrowed about €12.7m between October 2012 and the end of December 2013, according to the latest review of the scheme.

The government project has only provided about €10m a year in additional lending to small businesses – about one-fifteenth of its annual €150m target.

The scheme has also fallen way behind its target of creating 4,000 jobs over three years – so far, only 409 new jobs have been created.

It has only supported 72 businesses – a tiny fraction of the 5,600 it had aimed to help.

Businesses in the north-east and north-west regions benefited least from the scheme while those in Dublin, Kildare, Meath and Wicklow did best – securing more than half of the loans approved.

A spokesman for the Department of Jobs, Enterprise and Innovation said the scheme is being reviewed "with a view to enhancing the uptake and impact of the scheme".

Mark Fielding, chief executive of the Irish Small and Medium Enterprises Association (ISME), said: "The scheme wasn't advertised that well to small businesses and was very cumbersome."

Separately, research published by the Central Bank last week found about one-third of SMEs have no debt.

"Incidences of extremely high indebtedness are not as common in the Irish SME population as might be expected given the extent of difficulties in SME loan repayments," said the research.

Sunday Indo Business

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