The Irish Small and Medium Enterprises Association (Isme) has welcomed a requirement imposed on the two main Irish banks to increase lending to small and medium enterprises.
Minister for Finance Brian Lenihan today said AIB and Bank of Ireland would have to make available a minimum of €3 billion each in new increased credit facilities to SMEs this year and next as part of a package of State support for the banks.
Under the plan, the banks will also make available €20 million each for Seed Capital to be provided to Enterprise Ireland supported ventures, building on the very successful programme launched in 2009.
Mr Lenihan outlined the scheme in the Dail today while also providing an update on the likely additional capital required by Irish banks to cover losses on their property portfolios.
Isme called on the Government to rigorously monitor the banks, to ensure that the commitment to increased lending to SMEs was met and that viable businesses in need of finance receive it.
Any bank that does not comply should automatically be penalised and refused any further State assistance under the recapitalisation programme, the association said.
Isme chief executive, Mark Fielding, said: “The Government needs to be aware that the banks, unless challenged, will use the Nama process for their own devices and have no interest in supporting other parts of the economy.”
“Nama will eventually lead to a stronger banking sector, but it will also lead to a substantially weakened indigenous SME sector, unless the Government makes good on its commitment to increase bank lending".
Employers' group Ibec echoed Isme’s response saying Nama will only help economic recovery if it resulted in an increase in lending to businesses.
"The Government and the banks must now work together to ensure that the availability of credit to viable businesses is fully restored," Ibec director general Danny McCoy said.
The Small Firms Association also welcomed the announcement, saying one in four small and medium enterprises were not getting enough funding.
Director of the association, Patricia Callan, said: “Whilst this is a welcome development in the continuing efforts to stabilize the banking sector, it will have no direct benefit to small business lending".
The Respond! Housing Association called on Nama to work with the social housing sector in order to help those in urgent need of housing.
It said the agency could increase the housing supply in partnership with the voluntary housing sector.
“The needs of those we are looking to house must be of utmost importance and the suitability of estates under the control of Nama must be closely examined,” spokeswoman Aoife Walsh said.