Dáil Éireann Debate, Wednesday - 16 September 2020
178. Deputy Sorca Clarke asked the Minister for Agriculture, Food and the Marine if he has met with the banking sector or farmers organisations regarding the interest rates being charged by banks here on farm related finance and loans; and if he will make a statement on the matter. [24331/20]
View answerMy Department meets and liaises with the main banks on access to finance issues relating to the agri-food sector and is currently scheduling meetings for me with the CEOs of the main banks. There is also good cross-Departmental cooperation on banking matters with the Department of Business, Enterprise and Innovation (DBEI) and the Department of Finance. In recent years there have been a number of initiatives undertaken, primarily through the publicly-owned Strategic Banking Corporation of Ireland (SBCI) to address gaps in the market. Currently, liquidity and working capital needs can be addressed through the COVID-19 Credit Guarantee Scheme and longer-term investment needs by the Future Growth Loan Scheme
Last week, with my colleagues the Tánaiste and the Minister for Finance, I launched the €2 billion COVID-19 Credit Guarantee Scheme, the largest of its kind in the history of the state. The COVID-19 pandemic has resulted in a severe disruption to economic activity. Following discussions early in the pandemic, the banking sector announced a three-month period of flexibility for customers, including provision of payment holidays or emergency working capital facilities. This was subsequently extended to six months and will expire in October. As the recovery begins, many COVID-impacted businesses will require additional liquidity and working capital facilities. The COVID-19 Credit Guarantee Scheme is designed to incentivise finance providers to continue to support economic activity by providing liquidity and finance agreements to businesses. The Scheme is targeted towards businesses which have experienced an adverse impact of minimum 15% in actual or projected turnover or profit due to the impact of COVID 19 and have difficulties in accessing credit.
The CCGS will provide an 80% State-backed guarantee on bank lending to SMEs until the end of this year, for terms between 3 months and 6 years. The CRS will be administered for the State by the SBCI and SMEs will be able to go directly to the banks. The guarantee can be used for a wide range of lending products between €10,000 and €1 million, for terms between 3 months and 6 years. It will be available to all SME sectors, including primary producers, i.e. farmers and fishers.
The Future Growth Loan Scheme supports strategic long-term capital investment by SMEs, farmers and fishers. The Scheme was developed by DAFM and DBEI, in partnership with the Department of Finance, the Strategic Banking Corporation of Ireland (SBCI) and the European Investment Fund (EIF). It is being delivered through participating finance providers and made €300 million of investment loans available to eligible Irish businesses, including farmers and the agri-food & seafood sectors. The loans are competitively priced (an initial maximum loan interest rate of 4.5% for loans less than €250,000), are for terms of 8-10 years and support strategic long-term investment. A minimum loan amount of €100,000 applies up to a maximum of €3,000,000 per applicant. Considering the needs of Irish farmers, a specific minimum of €50,000 has been secured for them.
This is a financial product that was previously unavailable in Ireland. The unique characteristic of the Scheme is that loans up to €500,000 are unsecured making it a viable source of finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their banking institution. Food companies, too, have identified long-term investment finance of up to ten years as a critical need which is currently unavailable in Ireland. The effects of his product will be felt all along the food production chain from primary producer to processor. The Future Growth Loan Scheme has been open for loan eligibility applications through the SBCI website since April 2019. The scheme has been a success with very strong demand for investment loans. As part of the Government's Covid-19 response, a second tranche of €500 million, with up to 40% available to the agri-food sector including farmers, was launched on 30th July 2020.
Food business operators can also avail of the Brexit Loan Scheme and COVID19 Working Capital scheme. Further information on any of these loan schemes can be found on the SBCI website (www.sbci.ie).
