The Credit Guarantee Scheme was implemented in 2012 and is available to Covid-19 impacted businesses, it supports loans up to €1 million for periods of up to 7 years. The Scheme offers a partial Government guarantee of 80% to banks against losses on qualifying loans to eligible SMEs. 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.
An application to access the Credit Guarantee Scheme can be made through one of the participating finance providers 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.
Primary producers in agriculture, horticulture and fisheries are excluded from the current Credit Guarantee Scheme under State aid rules. However, they will be included under the Covid-19 Credit Guarantee Scheme arising from the amended State Aid rules under the the European Commission’s State Aid Temporary Framework measures to support the economy in the context of the Covid-19 outbreak.
The new Scheme will be available to all SME sectors, and will also be available to small Mid-Caps (under 499 employees) which are excluded from the current Scheme.
Refinancing of existing debts are excluded from the current Credit Guarantee Scheme as the purpose of this Scheme is to facilitate additional lending into the economy. Such arrangements continue to be dealt with by banks under their current lending arrangements. The new Scheme will include re-financing arrangements, the terms of these arrangement are currently under discussion with the financial institutions.
The implementation of the Covid-19 Credit Guarantee Scheme will require primary legislation, the drafting of which has been approved by Government, and my officials are already working with the Office of the Parliamentary Counsel on this drafting work.
