Dáil Éireann Debate, Tuesday - 7 July 2020
47. Deputy Pearse Doherty asked the Tánaiste and Minister for Business, Enterprise and Innovation the number of applications for loans under the Covid-19 working capital loan scheme that have been rejected by lenders since 23 March 2020. [14641/20]
View answerThe Covid-19 Working Capital Scheme makes available a fund of up to €200 million 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. Work is under way on a significant expansion to the scheme and this will be brought to the market in the coming weeks.
This Covid-19 Working Capital Scheme is operated by the Strategic Banking Corporation of Ireland (SBCI) through participating finance providers. It features a two-stage application process, whereby businesses must first apply for eligibility confirmation with the SBCI. Successful applicants are issued an eligibility reference number which they can use to apply with participating finance providers. This code remains valid for six months, and businesses may apply to secure eligibility for an application at a later date.
The scheme is open to eligible SMEs and small mid-caps (businesses of up to 499 employees) negatively impacted by Covid-19. As of the most recent report (3 July), there had been 3,288 applications for eligibility under the scheme made to the SBCI. Of those, only 15 applicants (less than 0.5%) have so far been determined to be ineligible.
Loans under the scheme are subject to the participating banks’ own credit policies and procedures. Information on the decline rate of loan applications under the scheme remains with the banks and is not reported on in relation to individual schemes.
If an applicant feels that their loan application has been declined unreasonably, they can appeal this decision through the Credit Review Office. Applicants may also use the same eligibility reference number to apply with another participating bank.
SME credit decline rates are collated through the Department of Finance Credit Demand Survey and the Central Bank of Ireland SME Market Report. For its Credit Demand Survey, the Department of Finance conducts a biannual survey of 1,500 SMEs in relation to the demand for bank credit and related issues. The results from the most recent survey in respect of the period April 2019 to September 2019, shows that excluding pending applications, the overall decline rate stands at 14% (the same level compared to September 2018). According to the Central Bank of Ireland's most recent SME Market Report (2019), "rejection rates on loan/overdraft applications in Ireland have declined and converged to euro area averages."
The decline rates for SME loans will continued to be monitored through these surveys and comparison will be made to SME loan decline rates in the euro area. The data from these surveys is a significant source of information on which insights can be drawn in relation to access to finance for SMEs in Ireland.
