Thursday, 9 May 2019

Questions (35)

Mattie McGrath

Question:

35. Deputy Mattie McGrath asked the Minister for Agriculture, Food and the Marine the reason only 81 approved loans under the Brexit loan scheme have progressed to bank level despite 462 eligibility applications received; and if he will make a statement on the matter. [19045/19]

View answer

Written answers (Question to Agriculture)

The €300 million Brexit Loan Scheme was developed in cooperation with the Department of Business, Enterprise and Innovation (DBEI) and the Strategic Banking Corporation of Ireland (SBCI), to provide working capital support to enable eligible Irish businesses to implement the necessary changes to address the challenges posed by Brexit. The Scheme opened for applications on 28th March 2018 and it will remain open until 31st March 2020.

It provides for loans of €25,000 to €1,500,000 per eligible enterprise at a maximum interest rate of 4%, ranging from 1 year to 3 years, with unsecured loans up to €500,000. The loans can be used for future working capital requirements or to fund innovation, change or adaptation of the business to mitigate the impact of Brexit.

Applications for eligibility assessment must be made to the SBCI who, on approval, assign an eligibility reference number. This reference number along with the loan application may then be provided to a participating lender.

At 26th April, there were 600 eligibility applications received, of which 542 are approved and 16 are ineligible. The total number of loans progressed to sanction at bank level is 117 to a value of €25.1m, 23 of which relate to food businesses to a value of €7.4m.

The SBCI have informed my Department that the relatively low progression from eligibility approval to loan sanction is largely a reflection of the current uncertainty regarding the outcome of Brexit. Businesses are establishing their eligibility but not yet drawing down the finance. The number of eligibility applications approved indicates a good level of interest in the Scheme, and is a good indicator of businesses engaging in Brexit preparedness.

In addition to the Brexit Loan Scheme, the Future Growth Loan Scheme has been developed by my Department and DBEI in partnership with the Department of Finance, the SBCI and the European Investment Fund (EIF).  It will be delivered through participating finance providers and make up to €300 million of investment loans available to eligible Irish businesses, including farmers and the agrifood & seafood sectors. The loans will be competitively priced and will be for terms of 8-10 years and will support strategic long-term investment in a post-Brexit environment.

This is a long-awaited source of finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their banking institution.

Food companies have identified long term investment finance of up to ten years as a critical need which is currently unavailable in Ireland. I am pleased that the Government have been able to deliver this product and its effects will be felt all along the food production chain from primary producer to processor.

I was pleased to launch this Scheme recently with my colleagues. It is open for loan eligibility applications through the SBCI website since 17th April.