Government announced a new €2 billion COVID-19 Credit Guarantee Scheme as a further development of the existing Credit Guarantee Scheme already available from AIB, BOI and Ulster Bank. This Scheme forms a major component of the government’s strategy to aid SMEs in these difficult times by providing critical support to ensure businesses are facilitated in having access to credit facilities to assist a return to a more regular trading environment. It will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years. The guarantee will support a wide range of lending products between €10,000 and €1 million that have a maximum term of 6 years or less. The Scheme will be available to all SME sectors, including primary producers and will have interest rates below current market rates. The implementation of this Scheme will require legislation, and my officials are currently working with the Office of the Parliamentary Counsel on drafting.
There are a number of liquidity supports for COVID 19 impacted businesses available right now, including the existing Credit Guarantee Scheme which was implemented in 2012, supporting loans up to €1 million for periods of up to 7 years. The scheme is designed to support a range of debt products appropriate to the borrowing needs of SMEs. Term loans and other products such as stocking facilities, performance bonds are covered by the Scheme. It is possible for SMEs to avail of between a three to six-month interest-only payment period subject to the lender’s assessment of the application.
An application to access the Credit Guarantee Scheme can be made through one of the participating lenders which are currently Allied Irish Banks, Bank of Ireland and Ulster Bank Ireland. The Scheme is operated by SBCI, the Department plays no role in the application or decision-making process, which, is fully delegated to the participating lenders. The Credit Guarantee Scheme facilitates guarantees up to a maximum of €150 million in any one year.
When the COVID-19 crisis began, I made changes to the Credit Guarantee Scheme to make it easier for businesses to access – including removing the requirement that businesses be refused a loan by the banks before they could access the scheme.
However, at this time the demand for working capital financing is channeling through the COVID-19 working capital scheme which has 2,278 eligibility applications from SBCI and 237 loans sanctioned for €37 million. There have been no approved facilities submitted to SBCI from financial providers since 19 March.
I can assure the Deputy that I continue to work with my colleagues across Government to examine further supports to assist businesses impacted by Covid-19.