16th July 2019
Part of the Government’s Brexit supports, the reduction to 0.5% in premium cost will support SMEs in addressing challenges to growth and productivity.
Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection, Pat Breen TD today announced the reduction of the premium paid by users of the SME Credit Guarantee Scheme from 1% to 0.5%. The reduction is part of the suite of Government measures to support SMEs as they prepare for Brexit.
The Credit Guarantee Scheme is an important Government support which assists viable SMEs, which under normal lending criteria are unable to borrow from their bank, in accessing credit from commercial lenders that are part of the scheme. The Scheme’s key features include facilities of €10,000 up to €1,000,000 for terms of up to 7 years. The scheme covers term loans, demand loans and performance bonds.
Launching the new premium rate today (July 16th) Minister Breen said:
“Availability of credit is the lifeblood of all small businesses and the Credit Guarantee Scheme plays a vital role in making in easier for SMEs to access the finance they need. The scheme continues to expand its reach across all regions of the country and I am confident that the reduction of 50% in the rate applied to the premium will further encourage interest among SMEs”.
He added: “It is critical to Ireland’s continued economic growth that our almost 250,000 SMEs are encouraged and facilitated to reach their full potential. The Government is committed to helping SMEs to overcome obstacles to growth and productivity and with Brexit approaching, this is more important than ever. Access to adequate credit facilities remains a major barrier in this regard.
The Scheme is operated on behalf of the Department by the Strategic Banking Corporation of Ireland (SBCI) and is available from the participating banks.
Minister Breen concluded: “I would encourage all SME operators seeking to grow and develop their businesses to consider the benefits of the Credit Guarantee Scheme.”
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 0.5%) 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.
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 has lead responsibility for Irish policy on global trade and inward investment and 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
For further information please contact Press Office, D/Business, Enterprise and Innovation, firstname.lastname@example.org or (01) 631 2200
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