Wednesday, 3 June 2020

Questions (418)

Michael McGrath

Question:

418. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation the reason for the prohibition on refinancing existing loans under the new €2 billion credit guarantee scheme particularly since many businesses will have to restructure their loans in the coming months as a consequence of the Covid-19 crisis; and if she will make a statement on the matter. [8285/20]

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Written answers (Question to Business)

The Government on 2 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. 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 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, the drafting of which has commenced.

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 is expected to include overdrafts and short-term re-financing facilities, the terms of which are currently under discussion with the financial providers.

I can assure the Deputy that I continue to work with my colleagues across Government to examine further appropriate supports to assist businesses impacted by Covid-19.