State to provide funds to boost credit for SMEs

The Government will shortly announce the establishment of the Strategic Banking Corporation of Ireland (SBCI) in a bid to improve access to credit for small and medium-sized businesses.

The SBCI will provide funds to banks and financial institutions on the proviso that they lend it to SMEs with more attractive terms and conditions than have typically been the case in recent times, a Department of Finance spokesman said yesterday. It is intended that more than €800 million in low-interest loans will be advanced through the SBCI, which will come under the auspices of the National Treasury Management Agency.

It will be formally unveiled this week, once the Cabinet approves its establishment.

The loans will will carry lower interest rates than are currently available to SMEs and will be offered by commercial banks that redirect SBCI funding. The credit will be offered over periods of longer than 10 years to better match the duration of the long-term growth plans of small businesses.

Some funding is expected to come from state-owned German bank KfW, which last year offered to provide finance for the Irish SME sector.

Minister for Finance Michael Noonan dismissed concerns earlier this month about property-related indebtedness among Irish small businesses. "The SMEs are being sorted out," he said in Brussels a fortnight ago.