AIB SME funds 'must be backed up by loans'

Meath East Fianna Fáil TD Thomas Byrne has welcomed the news that AIB has pledged to make €500 million available to lend to small businesses. "This funding pledge for small businesses is welcome but it must be backed up by lending to viable enterprises that form the backbone of the rural economy," he added. "The Minister for Enterprise, Trade and Innovation, Batt O'Keeffe, TD, has met with AIB and they agreed to make the funds available following reports from local small businesses that they were having difficulties in securing loans from their banks. "Minister O'Keeffe is scrutinising the proposals submitted by the AIB and Bank of Ireland to ensure that they are focussed on providing credit to small businesses and the credit reviewer, John Trethowen, will monitor the supply of credit and adjudicate on new appeals on behalf of borrowers." Deputy Byrne said small businesses are an essential part of the rural economy and important employers, so it was vital that the banks support any viable enterprises in their bid to survive or expand. "This pledge by AIB is welcome but must be backed up with lending," he added. The European Investment Bank (EIB), meanwhile, has welcomed AIB's application for a second tranche of funding for Irish SMEs. This comes as AIB said it had fully allocated the initial €100 million EIB Loan Fund for small businesses. AIB will now formally apply for a second tranche of €100 million. The initiative is part of AIB's recapitalisation commitment to the Government for an additional €3 billion in new or additional SME lending in each of 2010 and 2011. Plutarchos Sakellaris, vice-president of the European Investment Bank, said: "The European Investment Bank is pleased to increase funding for Irish SMEs through AIB. This is part of our wider engagement to assist SMEs across Ireland and elsewhere in Europe to continue to access investment finance during economically challenging times." John Irwin, head of business credit products at AIB said: "Over 1,100 AIB SMEs will benefit from this fund and are investing in their businesses. Sectors that have particularly benefited include agriculture, manufacturing and retail," he said. In Co Monaghan, Rita Shah is one of the customers who has already benefited from the fund. She is joint managing director of Shabra Plastics & Recycling Ltd. She said: "Recently, AIB has helped secure an EIB loan for us which will enable our expansion plan to go ahead. Shabra has been expanding since 1995 and AIB has played a very solid part in our expansion."