Dáil Éireann Debate, Tuesday - 5 March 2024
250. Deputy Louise O'Reilly asked the Minister for Enterprise, Trade and Employment how on-balance-sheet liability exposure is calculated for SBCI-backed loans where the State guarantees 80 percent of a loan; how much the State is liable for per €10 million loan scheme where the State guarantees 80 percent of a loan; and if he will make a statement on the matter. [10210/24]
Amharc ar fhreagraThe Credit Guarantee Scheme (CGS) which became operational in 2012 and was revised in 2017, provided a State guarantee to participating lenders of 80% on eligible loans to viable small and medium-sized enterprises (SMEs).
The COVID-19 Credit Guarantee Scheme (CCGS) was launched in September 2020 to assist businesses that were negatively impacted by COVID-19. The Scheme was developed in accordance with the European Commission’s State Aid Temporary Framework and was available to SMEs, Small Mid-Caps and primary producers that met the eligibility criteria. Lending under this Scheme ceased on 30 June 2022 when the Temporary Framework expired. The Scheme provided a State guarantee of 80% to participating lenders on lending facilities up to a maximum of €2 billion.
The Ukraine Credit Guarantee Scheme (UCGS) was launched in January 2023. The Scheme was developed to assist businesses impacted by cost increases arising from the conflict in Ukraine. The Scheme provides a State guarantee of 80% to participating lenders on lending facilities up to a maximum of €1.2 billion. Loans are of up to €1 million are available to SMEs and Small Mid-Caps for working capital and investment purposes from banks, non-bank providers and credit unions. The Scheme is administered by the Strategic Banking Corporation of Ireland (SBCI) and is available until 31 December 2024.
A total of €1.02 billion was drawn in loans under these Schemes from their inception up to 31 December 2023 (CGS loans drawn of €125.96 million, CCGS loans drawn of €708.86 million and UCGS loans drawn of 182.96 million).
In the case of each of these Schemes, the guarantee is paid by the State (the “guarantor”) to the participating lender on the unrecovered outstanding principal balance on a loan in the event of a borrower defaulting on the repayments. Total claims paid on these schemes amounts to €10.9 million as at 31 December 2023. The State also receives a premium on each loan drawn under these Schemes. Total premium received up to 31 December 2023 amounted €9.5 million.
The total maximum exposure for the Department in relation to loans outstanding at 31 December 2023 was €363.8 million from data provided by the SBCI (€0.5 million under CGS, €280.4 million under CCGS and €82.9 million under UCGS). The total maximum exposure figure is provided as a contingent liability in my Department’s Appropriation Account each year. The total maximum exposure is based on 80% of outstanding loans less any claims already paid.
The maximum exposure on €10 million of loans drawn with an 80% State guarantees would be €8 million on day one of the loans. The maximum exposure each year will reduce with subsequent repayments on the loans to 80% of the outstanding balance.
My Department will continue to monitor on an on-going basis, the contingent liability exposure, claims paid and premiums received under the Scheme.
