Dáil Éireann Debate, Tuesday - 14 July 2020
31. Deputy James O'Connor asked the Tánaiste and Minister for Business, Enterprise and Innovation when the new €2 billion credit guarantee scheme will be operational; and if he will make a statement on the matter. [15806/20]
View answerThe new €2 billion COVID-19 Credit Guarantee Scheme announced by Government forms a major component of the Government’s strategy to aid SMEs in these difficult times. It will provide critical support to ensure businesses are facilitated in having access to credit facilities to assist a return to a more regular trading environment.
It is a further development of the existing Credit Guarantee Scheme and will initially be available through the current finance providers Allied Irish Banks, Bank of Ireland and Ulster Bank Ireland.
The Scheme will provide an 80% State guarantee on lending until the end of this year, for terms between 3 months and 6 years and will offer a range of lending products between €10,000 and €1 million including working capital and term loan facilities.
The key feature of the Scheme is that it will ensure the availability of liquidity to businesses by leveraging the strong relationship between banks and their customers all over the country.
There are a number of steps which need to be completed in relation to the Scheme, however, it is likely that the new Credit Guarantee Scheme will be available in September/October. It will commence second stage debate in the Dail next week.
The implementation of this Scheme requires amendments to the Credit Guarantee Act 2012 and following approval to publish the Credit Guarantee (Amendment) Bill 2020, the legislation will be considered by the Oireachtas in the coming week.
In addition to the legislative requirements, this ambitious COVID-19 CGS requires important engagement with the European Commission and the participating finance providers.
The new Scheme will take advantage of the relaxation of State Aid rules under the European Commission’s Temporary Framework which has provided the opportunity to widen the base of the current Credit Guarantee Scheme to now include primary producers. My officials are currently engaged with the European Commission in seeking approval and ensuring the Scheme's adherence to the rules set out in its Temporary Framework.
Officials from my Department and from the Department of Finance and Department of Agriculture, Food and the Marine along with the Strategic Banking Corporation of Ireland are engaging with finance providers in relation to the specific terms and conditions of the Scheme.
This engagement provides the opportunity to develop the Scheme with provisions that help its effective and efficient roll-out. As the State is providing a significant support to banks to provide credit facilities to companies, it is expected that the banks will apply interest rates below current market rates. It should also be noted that as required by the Temporary Framework, a premium will be charged in recognition of the State backed guarantee.
I expect the participating finance providers to implement this Scheme in an efficient and effective manner to ensure that this badly needed finance is quickly made available to businesses.
