Wednesday, 27 May 2020

Questions (396)

Robert Troy

Question:

396. Deputy Robert Troy asked the Minister for Business, Enterprise and Innovation the reason there has not been any approved facility arising from Covid-19 submitted to SBCI from financial providers under the credit guarantee scheme. [7047/20]

View answer

Written answers (Question to Business)

The Government on 2nd May announced a new €2 billion Covid-19 Credit Guarantee Scheme as a further development of the existing Credit Guarantee Scheme (CGS) 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 can be used for a wide range of lending products between €10,000 and €1 million that have a maximum term of 6 years or less.

The implementation of this 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.

There are a number of liquidity supports for Covid-19 impacted businesses currently available, including the existing Credit Guarantee Scheme 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 existing 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.

There have not been any approved facilities arising from Covid-19 submitted to SBCI from financial providers under the existing Credit Guarantee Scheme. While discussions between the financial providers and their customers are confidential in nature, it is possible that borrowers may be availing of other Government schemes which are available or are awaiting further information on the new Covid-19 Credit Guarantee Scheme.