Dáil Éireann Debate, Wednesday - 20 May 2020
518. Deputy Louise O'Reilly asked the Minister for Business, Enterprise and Innovation if legislation is needed in order for the pillar banks to issue loans under the SBCI future growth loan scheme. [6056/20]
Amharc ar fhreagraThe Future Growth Loan Scheme (FGLS) was launched in April of 2019 and makes available a fund of up to €300m to eligible Irish businesses to fund strategic, long-term investment. The scheme was developed by my Department in cooperation with the Department of Agriculture, Food and the Marine. It leverages a guarantee from the European Investment Fund (EIF) and is operated by the Strategic Banking Corporation of Ireland (SBCI) through participating finance providers.
The scheme has been well received, and as at 8 May there have been 3,502 applications for eligibility under the scheme, of which 3,327 have been approved. The strong uptake of the scheme has meant that the initial funding of €300m has now been almost fully subscribed. To date, 1,045 applicants have progressed to sanction under the scheme.
On 8 April, I announced a €200 million expansion to the scheme.
The FGLS is underpinned by a 64% counter-guarantee from the European Investment Fund. This counter-guarantee provides significant risk protection to the Exchequer against potential losses from the loan guarantee scheme. The FGLS was established using the European Investment Fund Agreement Act 2018. This Act allows for the Minister for Business, Enterprise and Innovation and the Minister for Agriculture, Food and the Marine to enter into agreements with the European Investment Fund (EIF) to facilitate access to finance for qualifying enterprises.
There is a limit of €75 million set out in the Act on the total value of agreements (for First Loss payments) that the relevant Ministers can enter into with the EIF. Capacity currently remains within the aggregate limit set out in the Act to allow for an agreement with the EIF in relation to the planned €200m expansion of the FGLS. Officials of my Department, the Department of Agriculture, Food and the Marine, the Department of Finance, and the SBCI are working to ensure this is available as soon as possible.
However, the European Investment Bank (EIB) Group recently announced, as part of the European Union response to COVID-19, that it would be providing €25 billion in guarantees to underpin €200 billion in funding for member States to mitigate against COVID-19. For Ireland to be able to enter into additional agreements with the EIF, so as to leverage these EIB guarantees, will require an amendment to the aggregate limit set out in the European Investment Fund Agreement Act 2018.
So, while there is no legislation required to allow the pillar banks to issue loans under the Future Growth Loan Scheme, legislation changes would be required for further expansions of the FGLS beyond that which I have already announced.
Officials of my Department have been working urgently alongside the Office of Parliamentary Counsel on the drafting of legislation to amend the aggregate limit for agreements within the European Investment Fund Agreement Act 2018. The intention is that it will be progressed through the Oireachtas as a matter of urgency once a new Government is formed.
