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Policy Information

Bank and Non-Bank Funding for small to medium-sized enterprises (SMEs)

Published: 7 December 2018
From: Department of Finance

Bank Funding

With financing options available from Allied Irish Bank (AIB), Bank of Ireland (BOI), Ulster Bank, and Permanent TSB, and KBC Bank, Irish SMEs now have a number of bank finance providers available to them.

AIB and BOI submit their lending plans to the Department of Finance and the Credit Review Office at the beginning of each year. These plans outline how they intend to achieve their lending targets.

SME Credit and Lending Section and the Credit Review Office analyse the plans and meet with the banks to discuss any issues of note. The banks also meet with the Department of Finance and the Credit Review Office on a quarterly basis to discuss progress.

In addition to these meetings, the banks submit monthly reports that outline progress on lending broken down by sector and region. This ensures that new lending continues to increase as a percentage of total sanctioned lending. It also ensures that no sector or region is disadvantaged as a result of bank lending policy.

The SME Credit and Lending Section also meets with the other banks to ensure that the Department of Finance has a thorough grasp of the bank SME lending landscape.

The section also liaises with small business representative organisations whose members have first-hand experience of dealing with the banks.

Non-Bank Funding

SMEs use financing for growth and investment but also to satisfy working capital needs, which can include financing their supply chains.

The SME Credit and Lending Section promotes and evaluates options to diversify funding for SMEs away from banks. This is especially relevant given that many SMEs rely on the banking sector for financing needs. Irish SMEs are among the most reliant in Europe on bank funding.

As SMEs represent many different business types and sizes, government policy in Ireland is to provide a wide variety of supports for the sector.

In terms of non-bank funding, the SME Credit and Lending Section are supporting or investigating the use of the following policy interventions:

  • risk sharing loan guarantee schemes
  • the use of European financial instruments to optimise the funding available to SMEs
  • the regulation of crowdfunding
  • a review of debt-equity hybrid instruments as a pathway to equity finance for SMEs.

Action Plan for Jobs 2017

The Ensuring Finance for Growth section of the [Action Plan for Jobs 2017] was coordinated by the SME Credit and Lending Section through contributions from the [SME State Bodies Group.]

As in previous years, ensuring that viable SMEs have access to a suitable supply of credit from a range of bank and non-bank sources to support growth and employment is a priority.

The actions contained in the section on Ensuring Finance for Growth in the Action Plan for Jobs 2017, therefore, have been developed with this, and the possible implications of Brexit, in mind.

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