Dáil Éireann Debate, Wednesday - 27 May 2020
458. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation the schemes in her Department in place to assist Covid-19-impacted businesses; the number of loans drawn down since 1 March 2020 in each instance; the aggregate amount drawn down under each scheme since 1 March 2020; the number of businesses that have availed of each scheme since 1 March 2020; and if she will make a statement on the matter. [8009/20]
View answerSince the Covid-19 crisis began, Government has worked to put in place a suite of supports to ensure appropriate financing is available to businesses that have been impacted by the outbreak or by the restrictions that have been put in place to mitigate the spread of the disease. There are currently a number of loan guarantee schemes in place which support the working capital needs of impacted businesses.
Microfinance Ireland (MFI) was introduced as a support to microenterprises to help them address funding needs and provides loans to microenterprises that do not meet the conventional risk criteria of banks. These loans are available to eligible microenterprises responding to Covid-19-related difficulties, the negative impact of which must be a minimum of 15% of actual or projected income or profit.
MFI provides vital support to microenterprises by filling the lending gap in the market by lending to businesses that cannot obtain loans from other commercial lenders. Where typical MFI loans are available at an interest rate of 6.8-7.8%, Covid-19 loans are available at an interest rate of 4.5% where the application is made through the network of Local Enterprise Offices around the country, or where referred by a bank or Local Development Committees. Where an application is made directly to MFI, the interest rate is 5.5%. These loans also include an option for a moratorium on interest and repayments for the first six months.
The SBCI Covid-19 Working Capital Scheme opened for eligibility applications on 23 March. The scheme is offered by my Department in cooperation with the Department of Agriculture, Food and the Marine. The scheme is operated by the Strategic Banking Corporation of Ireland (SBCI). It currently makes available a fund of up to €200m to eligible businesses that are exposed to impacts arising from the outbreak of Covid-19, to enable those businesses to innovate, change or adapt in response to the current business environment.
Loans under this scheme are easier to access and offered at favourable terms when compared with other similar loans in the market, for example the maximum interest rate under the scheme is 4% and loans of up to €500,000 are available unsecured. Applicants may also be able to avail of a three-month interest-only payment period (depending on your lender’s assessment of your application).
Following my announcement on 8 April, this scheme is now being expanded to make available an additional €250m in lending, which will bring the total amount of lending available under this scheme to €450m.
Table of uptake:
|
Scheme |
Applications |
Amount drawn down |
Number of Business that availed of scheme |
|
Microfinance Ireland Covid-19 Loan |
2,574 inquiries |
€9,158,992 |
329 loans sanctioned |
|
SCBI Covid-19 Working Capital Scheme |
2,305 deemed eligible applicants |
loans sanctioned to a total value of €37,811,000 |
273 loans sanctioned(all figures as of May 21st 2020) |
As part of the 8 April announcement, I also announced a further €200m expansion of the Future Growth Loan Scheme. This scheme initially made available a fund of €300m to support loans to eligible businesses for strategic investment. The current scheme provides loans from €100,000 (€50,000 for farmers) to €3m per eligible business, for terms of 8-10 years. My Department is working through the details of this expansion and will bring this funding to market as soon as possible.
The Government on 2nd May also 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 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.
