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Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection, Pat Breen TD launches the new SME Credit Guarantee Scheme

Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection, Pat Breen TD today formally launched the revised SME Credit Guarantee Scheme, joined by Suzanne Sweeney, Head of Lending, Strategic Banking Corporation of Ireland (SBCI); Catherine Moroney, Head of Business Banking with AIB; Michael Lauhoff, Director of Business Banking with BOI; and Olaf Fitzsimmons, Head of SME Banking with Ulster Bank.  

The new scheme replaces the 2012 Scheme which expired in June and increases the guarantee to participating financial providers from 75% to 80% on qualified loans to SMEs. Its aim is to assist viable SMEs, which under normal lending criteria are unable to borrow from their bank, in accessing credit. The Scheme’s key features include facilities of €10,000 up to €1,000,000; terms of up to 7 years; term loans, demand loans and performance bonds.

Launching the Scheme today (July 10th) Minister Breen said:

“It is critical to Ireland’s continued economic growth that our almost 250,000 SMEs are encouraged and facilitated to reach their full potential. Access to adequate credit facilities remains a major barrier in this regard. The Government is committed to helping SMEs to overcome obstacles to growth and productivity and so I am delighted to formally launch the new Credit Guarantee Scheme.

The previous scheme was effective in helping those SMEs that may have had inadequate collateral; that operated in perceived higher-risk or novel business markets, sectors or technologies; and that required refinancing due to the exit of a lender from the market. The relaunched scheme is designed to be even more effective. It increases the guarantee to financial providers from 75% – 80%, has a lower premium charge for the first year, and has the potential for extension beyond the banks to other financial providers.”

Suzanne Sweeney, Head of Lending of SBCI, said:

“SBCI is pleased to support the formal launch today of the new Credit Guarantee Scheme 2017. The scheme complements the existing functions of the SBCI in providing greater access to finance for SMEs. It is also evidence of the Government’s commitment to provide ongoing support for SMEs, enabling them to scale and grow their businesses.

The new scheme facilitates increased credit risk appetite by providing on-lenders with a government-backed guarantee of 80% on the facility value; allows for a more efficient operational structure and; has resulted in greater interest from on-lenders.

We look forward to working closely with AIB, Bank of Ireland and Ulster Bank from here, to deliver the enhanced aspects of the new scheme to market.”

Ends

The Department of Business, Enterprise and Innovation (DBEI) plays a key role in implementing the Government’s policies of stimulating the productive capacity of the economy and creating an environment which supports job creation and maintenance. The Department also has a remit to promote fair competition in the marketplace, protect consumers and safeguard workers.

The Department also provides a range of tailored supports for enterprise of all sizes in Ireland, including support for businesses to prepare for Brexit. Supports include access to finance, management development, mentoring supports, business development programmes, market supports and trade promotion. We hold structured dialogue with key stakeholders and we advocate across Government to ensure the needs of SMEs are taken into account in the execution of national policy

If you would like more information about this topic, please call Press Office at (01) 631 2200 or email press.office@dbei.gov.ie.

Note for the editors

Credit Guarantee Scheme 2017

The revised SME Credit Guarantee Scheme 2017 aims to assist viable SMEs, which under normal lending criteria are unable to borrow from their bank, in accessing credit. The scheme operates by providing a 80% guarantee (previously 75%) to participating finance providers on qualifying loans to SMEs.

  • The scheme has been designed to address three barriers to lending:

  • Inadequate collateral

  • Novel business market, sector or technology which is perceived by finance providers as higher risk under current credit risk evaluation practices

  • Need for refinancing caused by the exit of an SMEs lender from the Irish market

The Scheme is operated on behalf of the Department by the Strategic Banking Corporation of Ireland (SBCI) and is available from the participating banks. If you are an SME, and are encountering one of the 3 barriers set out above, you can approach one of the 3 participating banks and ask for a loan under the scheme.

Key Features of the Scheme:

  • Facilities of €10,000 up to €1m

  • Terms of up to 7 years

  • Term Loans, Demand Loans and Performance Bonds

Reforms to the Scheme were provided for in 2016 amending primary legislation that led to the making of the Credit Guarantee Scheme 2017. This legislation allows new products to be rolled out by the SBCI in 2018 and following years, including the extension of the Scheme to cover loans other than traditional bank loans (i.e., invoice discounting, factoring, lessors etc.).

How much does the scheme cost?

The SME borrower pays a maximum 2% annual premium (currently 1%) to the Government in addition to the interest rate/fee charged by the bank. For the SME, the lower cost of the SBCI loan will partially offset the cost of the premium of the Credit Guarantee Scheme.

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