New measures aim to tackle credit famine
Published 14/02/2012 | 05:00
THE Government has once again promised to introduce solutions to the credit famine which is choking many businesses. Among the measures in yesterday's jobs action plan is a scheme to guarantee 75pc of some loans to small- and medium-sized businesses by the summer, and a scheme for small companies hoping to borrow less than €25,000 a year.
A strategic investment fund which matches private sector investment with National Pensions Reserve Fund cash is also planned. Details are still scarce and will be announced later in the year.
"We will promote new access to credit for small business," Taoiseach Enda Kenny said. "A loan guarantee scheme and a €100m micro finance loan scheme will also go live shortly."
The €100m micro finance scheme will be spread out over a decade and make €10m available each year. The various schemes all aim to address repeated complaints from businesses about the scarcity of credit and the alleged inability of banks to understand business needs.
Central Bank Governor Patrick Honohan has said banks no longer have the expertise to assess loan applications from many companies. Banks say few companies want to borrow and many business are not viable because of bad property deals.
Yesterday's new jobs report says government agencies will work with the banking sector to create a "cultural shift in lending practices towards sectors that are critical to economic growth".
Other ideas contained in yesterday's report include plans to carefully monitor existing promises by Allied Irish Banks and Bank of Ireland to lend €3.5bn to business this year and ensure that some of this lending is new money rather than recycled lending to existing clients.