Dáil Éireann Debate, Wednesday - 3 June 2020
421. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation the rules for the current working capital scheme; the reason loans under the scheme are to be up to only three years; if she is considering increasing same; if so, if it will require primary legislation for the change; and if she will make a statement on the matter. [8288/20]
View answerThe SBCI Covid-19 Working Capital Scheme was announced on 11 March and opened for eligibility applications on 23 March. The Covid-19 Working Capital Scheme is offered in cooperation with the Department of Agriculture, Food and the Marine. The scheme is operated by the SBCI and is supported by the European Investment Fund's InnovFin SME Guarantee facility.
It currently makes available a fund of up to €200m to eligible businesses that have been negatively affected by impacts arising from the outbreak of Covid-19 to enable those businesses to innovate, change or adapt in response to the current business environment. Following a further announcement on April 8 this Scheme is now being expanded to make available an additional €250 million in lending, which will bring the total amount of lending available under this scheme to €450 million.
The scheme is open to eligible SMEs and small mid-caps (businesses of up to 499 employees) negatively impacted by Covid-19. Loans under the scheme range from €25,000 to €1.5m and are for periods of up to three years. The maximum interest rate under the scheme is 4% and loans of up to €500,000 are available unsecured.
Full information on the terms and structure of the scheme is available through the SBCI’s Covid-19 Working Capital Scheme webpage.
The three-year term for loans under the scheme was determined by the scheme’s objectives as a working capital loan scheme to facilitate businesses as they seek to innovate, change or adapt in response to a changing business environment. Three years is typically the outside limit for what is considered “working capital.” Any proposed change to the scheme would require renegotiation between Government Departments, the SBCI, the European Investment Bank and the participating lenders, would take time to implement and would incur additional Exchequer costs.
Furthermore, loan approvals at bank level are subject to the bank's own credit policies and procedures, and longer loan terms for working capital would attract higher risk ratings, resulting in less businesses being approved for loans through the scheme.
Funding for terms of longer than three years is available through a number of other Government schemes, including from MicroFinance Ireland, the SME Credit Guarantee Scheme and the Future Growth Loan Scheme.
