Dáil Éireann Debate, Wednesday - 1 February 2023
59. Deputy Louise O'Reilly asked the Minister for Enterprise, Trade and Employment if he will provide a breakdown of the capital and current budget allocations for each programme under subhead A.14 SBCI loan schemes of the Revised Estimate for 2023, in tabular form. [5016/23]
View answerThe 2023 Revised Estimates Volume published by the Department of Public Expenditure and Reform provided for capital expenditure funding of €55,708,813 under Subhead A.14 SBCI Schemes for use by my Department in 2022. €1,000 has been provided under Subhead A.14 SBCI Schemes for 2023. The breakdown of the 2022 Capital allocation, is set out in the following Table:
|
Schemes |
Expenditure |
2022 |
|
Future Growth Loan Scheme |
Capital expenditure |
€708,813 |
|
Growth and Sustainability Loan Scheme |
Capital expenditure |
€55,000,000 |
|
Total |
|
€55,708,813 |
These SME schemes provide low-cost loans with no collateral requirements for loans up to €500,000, making funding available to businesses that would otherwise not be able to access funding.
The payments made in 2022 to the Strategic Banking Corporation of Ireland (SBCI) and the European Investment Bank Group (EIBG) by Department of Enterprise, Trade and Employment (DETE) are for delivery of the SME loan schemes. The schemes are also underpinned by funds allocated by the Department of Agriculture, Food and the Marine (DAFM). The DETE and DAFM payments must be paid before the loans are brought to the market in order for the European Investment Bank Group (EIBG) to allocate their resources for the risk share on the scheme.
For these loan schemes, the SBCI will provide an uncapped 80% guarantee to participating finance providers and the EIBG will provide a counter guarantee to SBCI such that the risk share for the scheme will be: 20% finance providers; 16% SBCI; 64% EIBG. This structure is extremely beneficial to the Exchequer in that it limits the loan default risk to the State to 16%. If losses on the schemes due to defaulting loans are less than modelled, then there may be a return of a potentially significant portion of the allocated funds to the Exchequer.
The Future Growth Loan Scheme (FGLS)
The Future Growth Loan Scheme (FGLS) was first launched in June 2019 to provide an option for SMEs and small mid-caps to access appropriate finance for investment purposes. The scheme initially provided for up to €300m in long-term lending, however in July of 2020 it was expanded by €500m to make a total of €800m available through participating financial providers. The scheme is operated by the SBCI and is funded by the DETE and DAFM. All the participating lenders are now closed to new applications under the FGLS indicating that they are of the view that they have received sufficient applications to use their full allocation under the scheme. Final use of allocations to participating finance providers may be impacted by decisions on loan approval and customer decisions to draw or not draw the approved loans. As of 30th January 2023, there have been 3,513 loans progressed to sanction under the scheme, to a total value of €773.9m.
The ‘Growth and Sustainability Loan Scheme’ (GSLS)
The ‘Growth and Sustainability Loan Scheme’ (GSLS) is a new long-term loan guarantee scheme that is being jointly developed by the DETE and DAFM in partnership with the SBCI and EIBG. It is the successor loan guarantee scheme to the Future Growth Loan Scheme, a scheme for which there was strong demand and for which there is already evidence of benefits for SMEs and the economy arising from the finance accessed. It is planned that the GSLS will be launched in the market in the first half of 2023.
When implemented, the GSLS will make up to €500 million in longer-term lending available to SMEs, including farmers and fishers and small mid-caps. Up to 70% of lending will be for strategic investments with a view to increasing productivity and competitiveness and thus underpinning future business sustainability and growth. The GSLS will also target a minimum of 30% of the lending volume towards Environmental Sustainability purposes.
