The Credit Guarantee Scheme was implemented under the Credit Guarantee Act 2012, which came into effect on 30 August 2012, with secondary legislation setting out the operational detail of the Scheme. The Credit Guarantee Scheme is available to Covid-19 impacted businesses, it supports loans up to €1 million for periods of up to 7 years. The Scheme offers a partial Government guarantee of 80% to banks against losses on qualifying loans to eligible SMEs. 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.
An application to access the Credit Guarantee Scheme can be made through one of the participating finance providers which are currently Allied Irish Banks, Bank of Ireland and Ulster Bank Ireland. The Scheme is operated by SBCI. The Department plays no role in the application or decision-making process, which, is fully delegated to the participating lenders. The current Credit Guarantee Scheme facilitates guarantees up to a maximum of €150 million in any one year.
There are no upfront costs for the scheme, however loans under guarantee represent a contingent liability for the State. Since its inception there have been eight claims against the Credit Guarantee Scheme for a value of €955,247.
Since its inception in 2012 there have been 863 loans sanctioned to the value of €151,659,224 up to 31st March 2020. While the monthly breakdown is not available I have provided the annual breakdown as follows.
|
Year
|
No. of Loans Sanctioned
|
Value
|
|
2012
|
6
|
€582,000
|
|
2013
|
88
|
€12,107,500
|
|
2014
|
68
|
€9,283,444
|
|
2015
|
108
|
€20,385,050
|
|
2016
|
131
|
€22,312,000
|
|
2017
|
129
|
€19,726,700
|
|
2018
|
139
|
€21,561,562
|
|
2019
|
118
|
€25,067,734
|
|
2020 Qtr 1
|
76
|
€20,633,234
|
As announced on Saturday, 2 May 2, Government has agreed a new €2 billion COVID-19 Credit Guarantee Scheme as a further development of the existing Credit Guarantee Scheme 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 will be able to 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 Scheme will be available to all SME sectors, including primary producers. It will also have interest rates below current market rates. 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.
