Dáil Éireann Debate, Wednesday - 20 May 2020
631. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation the differences between the existing credit guarantee scheme and the new €2 billion credit guarantee scheme announced on 2 May 2020; and if she will make a statement on the matter. [6673/20]
Amharc ar fhreagraThe Government on 2 May announced a new €2 billion COVID-19 Credit Guarantee Scheme as a further development of the existing Credit Guarantee Scheme (CGS) already available from AIB, BOI and Ulster Bank.
This Scheme forms a major component of the government’s strategy to aid SMEs in these difficult times by providing critical support to ensure businesses are facilitated in having access to credit facilities to assist a return to a more regular trading environment. It will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years. The guarantee can be used for a wide range of lending products between €10,000 and €1 million that have a maximum term of 6 years or less.
The implementation of this Scheme will require primary legislation, the drafting of which has been approved by Government, and my officials are already working with the Office of the Parliamentary Counsel on this drafting work.
There are a number of liquidity supports for COVID 19 impacted businesses currently available, including the existing Credit Guarantee Scheme supporting loans up to €1 million for periods of up to 7 years. The scheme is designed to support a range of debt products appropriate to the borrowing needs of SMEs. Term loans and other products such as stocking facilities, performance bonds are covered by the Scheme. It is possible for SMEs to avail of between a three to six-month interest-only payment period subject to the lender’s assessment of the application.
The differences between the existing Credit Guarantee Scheme (CGS) and the new Covid-19 Credit Guarantee Scheme include:
- An increase in the level of guarantee available to participating finance providers from €150 million per annum to €2 billion and an increase in the portfolio cap which will provide these finance providers with greater security to offer facilities under the guarantee.
- The Covid-19 CGS will be available to primary producers which are excluded from the existing Scheme due to State Aid rules. This restriction has been removed in light of the Covid-19 situation and in accordance with the European Commission's State Aid Temporary Framework.
- The Covid-19 CGS will be available to small Mid-Caps (up to 499 employees) which are excluded from the current CGS.
- The Scheme will have interest rates below current market rates. The exact figures cannot be announced until the legislation and operational aspects have moved further along the process.
My officials are also currently engaged in discussions with a view to broadening the number of participating finance providers participating in the Scheme.
I can assure the Deputy that I continue to work with my colleagues across Government to examine supports to assist businesses impacted by Covid-19.
