Dáil Éireann Debate, Wednesday - 3 February 2021
15. Deputy Catherine Murphy asked the Tánaiste and Minister for Enterprise, Trade and Employment if the €2 billion allocated to the Covid-19 credit guarantee scheme is in the account of the SBCI; if not, if the funds are drawn down by the bank in smaller amounts as required; if so, the location of same; and his plans for the balance of the fund if at the end of June 2021 there is a remaining amount from the €2 billion. [5292/21]
View answerThe COVID-19 Credit Guarantee Scheme (CCGS) has €2 billion in lending available for Irish businesses and is the largest guarantee scheme in the history of the State. Its function is to add certainty to businesses that funding is available for working capital and investment purposes. Loans of up to €1 million are available for up to five and a half years at reduced interest rates. Loans under €250,000 do not require collateral or personal guarantees. The Scheme is available to SMEs, small Mid-Caps (up to 499 employees) and primary producers and will run until 30 June 2020 in accordance with the European Commission’s State Aid Temporary Framework.
The guarantee schemes operating under the Credit Guarantee Act, which includes the CCGS, are based on contingent liability. What this means is that there is no cost to the State unless a participating enterprise is unable to pay back the loan for more than 90 days, whereupon the loan enters a default stage and the finance provider can call on the guarantee for 80 percent of the outstanding balance. These demands will be called on through the operator of the scheme, the Strategic Banking Corporation of Ireland (SBCI).
In such a scheme there is no upfront cost to the state in the allocations to finance providers. The finance provider issues loans utilising their own funds. Allocations under the scheme were assessed in depth by the agency with the relevant market knowledge, the SBCI, in accordance with the finance providers market share and ability to manage a suitably sized loan book.
While the State provides an 80 percent guarantee on these loans, this Department plays no role in the application or decision-making process in relation to loans offered under the Scheme, which, is fully delegated to the participating lenders. €26 million has been set aside in Budget 2021 for potential calls on the guarantee by finance providers and to cover operational costs.
There have been over €260 million in loan applications from 3953 Irish businesses in the four months since the launch of the CCGS up to the 22nd of January. Since the New Year, 19 Credit Unions and 3 non-bank lenders have also joined the scheme adding greater geographical reach and diversification in loan products available.
