Tánaiste Mary Coughlan has said that she and her officials at the Department of Enterprise, Trade and Employment are examining the feasibility of a funding scheme for small and medium sized enterprises, where the state would guarantee the funds loaned by banks.

The Tánaiste said such a scheme would be based on a pool of money that would be made available, guaranteeing the company would be able to repay its debt.

She said she was still concerned that access to working capital continues to be difficult for SMEs.

It is understood a proposal will be put to a cabinet sub-committee on economic renewal.

Mark Fielding of the small business group ISME says there are around 20 such schemes operating in Europe, including one in the UK.