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Covid-19 Pandemic Supports

Dáil Éireann Debate, Tuesday - 21 July 2020

Tuesday, 21 July 2020

Questions (70)

Louise O'Reilly

Question:

70. Deputy Louise O'Reilly asked the Tánaiste and Minister for Business, Enterprise and Innovation his views on whether the interest rates under the Covid-19 credit guarantee scheme are too high; his further views on the definition of fair interest rates for businesses under the scheme; and if he will make a statement on the matter. [17147/20]

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Written answers

The 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 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 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% guarantee on lending until the end of this year, for terms of up to 6 years and will offer a range of lending products between €10,000 and €1 million including overdrafts, working capital and term loan facilities.

The key feature of the Scheme is that it will ensure the provision of liquidity to businesses by leveraging the strong relationship between banks and their customers all over the country.

A distinction must be made between the current Credit Guarantee Scheme whereby banks offer loans at their normal market rates and the new COVID-19 Credit Guarantee Scheme which, due to the increased size of the guarantee as a result of the removal of the portfolio cap, is expected to provide interest rates at below market rates.

I met the CEOs of the three participating banks last week and stressed the need for interest rates to reflect the level of the State-backed guarantee being provided, with an 80% guarantee on individual loans and the removal of the portfolio cap.

In addition, I also stressed the need for them to ensure that this Scheme is implemented in an efficient and effective manner to ensure that this badly needed finance is quickly made available to businesses.

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 continue to engage with finance providers in relation to the specific terms and conditions of the Scheme.

The legislation in relation to the Scheme is expected to go through the Oireachtas this week, allowing for its swift enactment.

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