Dáil Éireann Debate, Thursday - 25 October 2012
95. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the person who has been contracted with operating the recently announced credit guarantee scheme; at what cost; the interest rate that will be charged for the credit; and if he will make a statement on the matter. [47140/12]
View answer96. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation if he based his credit guarantee scheme on the Northern Irish model; if he used that model at any level; and if he will make a statement on the matter. [47141/12]
View answerI propose to take Questions Nos. 95 and 96 together.
I announced last April that the contract for the practical oversight, management and operation of the Credit Guarantee Scheme was awarded to Maynooth-based company Capita Asset Services following a competitive tendering process. The annual cost under the contract will be €199,000. With regard to the interest rate, this will be a commercial matter for the individual participating banks. As required under EU State Aid rules, a premium will be charged by the State to companies availing of the Scheme and this has been set at 2%. The design of the scheme was drawn from international experience to support new lending that would not otherwise have been extended by the banks. The consultants who designed the Scheme are Capital for Enterprise Limited who have extensive experience of developing and operating the Small Firms Loan Guarantee and Enterprise Finance Guarantee schemes in the UK. The design uses a number of core design features of the UK’s guarantee scheme for SME lending.
However, it is tailored to address the characteristics and market inefficiencies of the Irish SME finance environment. This has been achieved by consulting, during the design phase, with a number of significant public and private sector bodies and stakeholders with interests in the provision of finance to Irish SMEs. The 75% guarantee rate is identical to the rate available to Northern Ireland Banks participating in the UK scheme. For every €150million of additional lending, the Scheme is expected to benefit over 1800 businesses and create over 1,300 jobs. The cost of the scheme per €150million of lending is €6.38 million. However this does not take into account benefits to the exchequer this lending will bring in terms of increased tax receipts and decreased social welfare payments. When these benefits are taken into account, the net gain to the Exchequer is over €25million per €150million of lending, representing a 400% return on the State’s investment.
