Dáil Éireann Debate, Wednesday - 3 June 2020
420. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation the guarantee charge being applied by the State under the new €2 billion credit guarantee scheme; the reason for such a fee in view of the fact that in the UK no such charge exists; and if she will make a statement on the matter. [8287/20]
View answerAs I announced on Saturday 2 May, Government has agreed 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. 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.
The borrower also pays a premium which partially covers the cost of providing the guarantee. State Aid rules for Government credit guarantees require that a premium be charged and makes no provision for a zero-value premium. This Scheme will require approval from the European Commission under the ‘Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak’. My officials are working closely with DG Competition to ensure that this approval can be secured in a timely fashion.
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.
