Dáil Éireann Debate, Tuesday - 23 June 2020
367. Deputy Peter Burke asked the Minister for Business, Enterprise and Innovation if a new future growth loan scheme will be released; if so, the date; the way in which it will operate; and if she will make a statement on the matter. [11909/20]
View answerThe Future Growth Loan Scheme (FGLS) was launched in April 2019 to address an identified market failure in the availability of longer-term lending for investment purposes to SMEs including farmers and fishers, and small mid-caps. It provides for loan periods of 8-10 years at competitive interest rates.
The scheme makes up to €300 million of loans available and is operated by the Strategic Banking Corporation of Ireland (SBCI) though participating lenders. The SBCI provides an uncapped guarantee of 80% to the participating financial providers. The scheme is underpinned by a counter-guarantee to the SBCI from the European Investment Fund (EIF), which is part of the European Investment Bank (EIB) Group. This counter-guarantee provides significant risk protection to the Exchequer against potential losses from the loan guarantee scheme. Losses to the scheme are shared as followed – 20% by the finance provider, 16% by SBCI and 64% by EIF.
The scheme was due to operate over a three year period, but the demand for the scheme has surpassed expectations such that the scheme is close to being fully subscribed after just one year of operation.
On 8 April, I announced that the FGLS would be expanded to make available a further €200 million in additional lending. Officials in my department along with officials in the Department of Agriculture Food and the Marine are negotiating intensely with the European Investment Fund on this expansion of the scheme. This work is now coming to conclusion and preparations are being made towards making this new lending available as soon as possible to SMEs, including primary producers, and this will be through participating lenders of the scheme. It is expected that the €200 million in new lending through the scheme will become available in early July.
Access to lending under the scheme will be based on a two-step process:
- Applicants must apply for eligibility to the scheme through the SBCI
- Applicants approved for eligibility through the SBCI then make application to a participating lender for loan approval. Loan approval will be based on the credit assessment and policy procedures of the participating lender.
In addition, a further €300 million in lending is to be made available through the scheme in further tranches over the 2021 and 2022 period to bring the total quantum in new lending through the FGLS to €500 million. This will provide for access to finance for the many businesses looking to invest in their long-term future, be that in response to COVID-19, to mitigate against Brexit impacts or to transform their businesses in terms of productivity, innovation and competitiveness to secure their future sustainability, growth and resilience.
