Written Answers Nos. 1-4
1. Deputy John Paul Phelan asked the Tánaiste and Minister for Enterprise, Trade and Employment the actions he plans to take to ensure that the credit guarantee scheme can be amended to examine if there will be significant increases in the current rate of successful applications to ensure that post-Covid viable businesses have sufficient access to funds; and if he will make a statement on the matter. [7491/21]
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 and primary producers.
While the State provides a guarantee on these loans, the 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. There are clear eligibility criteria set out in the lending terms, including a minimum impact of 15 percent on turnover as a result of COVID-19 and a return to viability in the future. These features were set by the European Commission in their State Aid Temporary Framework. The CCGS must operate in accordance with this Framework. Private finance providers have the widest network and closest relationship with Irish businesses to make these assessments.
Where an applicant has had a loan application refused, they may wish to appeal the decision to the Credit Review Office (CRO). The CRO helps SMEs who have had an application for credit of up to €3 million declined or reduced by the main banks. This is a strictly confidential process between the business, the Credit Review and the bank.
My Department has worked extremely hard to ensure there is choice out in the market for Irish businesses seeking state supported lending. Since January, 19 Credit Unions and 3 non-bank lenders have successfully joined the CCGS as finance providers. More are expected to be announced in the coming weeks. This long-term policy goal of diversification will add competition in the market and ensure a wide range of loan products being available. I encourage businesses to check out the CCGS pages on the Strategic Banking Corporation of Ireland’s website for a full list of participating finance providers.
I want to assure the Deputy that I and my officials are monitoring the Scheme and its effectiveness. Data is being published on a monthly basis on my Department website regarding the level of lending through the scheme, the sectoral breakdown and the uptake on a county basis.
2. Deputy Noel Grealish asked the Tánaiste and Minister for Enterprise, Trade and Employment the status of plans to assist businesses such as takeaway food services from restaurants and businesses that are already registered providers of the stay and spend scheme and their consumers; and if he will make a statement on the matter. [7504/21]
View answerI would like to highlight some of the help currently being offered by my Department to businesses which includes those within the hospitality sector, including those businesses offering take-away food activities and registered under the Stay & Spend scheme.
These are in addition to other schemes offered by different Departments such as Pandemic Unemployment Payment, Employee Wage Subsidy Scheme and Covid-19 Restrictions Support Scheme (CRSS).
The schemes available to businesses from my own Department include cheaper loan finance through MicroFinance Ireland, SBCI and the revised €2bn Credit Guarantee Scheme. Other supports including mentoring and trading online vouchers are also available though the Local Enterprise Offices.
I have also recently announced a new scheme called the COVID Business Aid Scheme (CBAS) which is aimed at those businesses who fall outside the eligibility requirements for CRSS. This new scheme will ensure businesses will be able to access help in meeting some of their fixed costs while suffering significant falls in turnover due to public health restrictions.
These businesses are likely to include businesses within the hospitality sector if they do not qualify for CRSS, have a rateable premises and their turnover is significantly impacted.
CBAS will help businesses to remain open and maintain links with their customers. It will help ensure that they are well placed to benefit from the re-opening of the economy over the coming months and maintain choice for consumers.
3. Deputy Catherine Murphy asked the Tánaiste and Minister for Enterprise, Trade and Employment if his Department or the Strategic Banking Corporation of Ireland, SBCI, will make a gain and-or a profit on funds loaned to Irish businesses through the Covid-19 credit guarantee scheme (details supplied); and the use that is made of profits made from lending by the scheme. [7529/21]
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 2021 in accordance with the European Commission’s State Aid Temporary Framework.
Finance providers under the scheme include commercial banks, credit unions and other non-bank lenders. Loan facilities are made available through finance providers utilising their own funds at interest rates below the market rate. In such a scheme there is no upfront cost to the state in the allocations to finance providers.
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).
As per State Aid rules set by the European Commission, a premium must be paid to the Irish State which will alleviate some of the costs. Premium rates range from 0.15% for a one-year term loan to 0.68% for a term loan of 5 and a half years for SMEs and primary producers. Rates for small mid-caps range from 0.3% for a one-year term loan to 1.55% for a term loan of 5 and a half years.
Premiums received will be used to fund the payment of claims under the Scheme. It is expected that the level of claims under the Scheme will exceed premiums collected. The issue of profit or gain is therefore not expected to arise. The SBCI operates the Scheme on behalf of the Department and can recoup costs incurred from the Department.
4. Deputy Martin Browne asked the Tánaiste and Minister for Enterprise, Trade and Employment his views on the demands by an association (details supplied) of front-line paramedics who want to be represented by another association; his plans in regard to their campaign; and if he will make a statement on the matter. [7653/21]
View answerIt has been the consistent policy of successive Irish Governments to promote collective bargaining through the laws of this country and through the development of an institutional framework supportive of a voluntary system of industrial relations that is premised upon freedom of contract and freedom of association. There is an extensive range of statutory provisions designed to back up the voluntary bargaining process.
Under Irish law, there is no requirement for an employer to recognise trade unions for the purpose of collective bargaining. Article 40 of the Irish Constitution guarantees the right of citizens to form associations and unions. It has been established in a number of legal cases that the constitutional guarantee of the freedom of association does not guarantee workers the right to have their union recognised for the purpose of collective bargaining.
However it is also worth noting that the Industrial Relations (Amendment) Act 2015, which came into effect in August 2015, provides an improved framework for employees’ right to engage in collective bargaining. The 2015 Act provides a clear and balanced mechanism by which the fairness of the employment conditions of workers in their totality can be assessed where collective bargaining does not take place.
The Minister for Health will be able to provide the Deputy with further information on this matter.
