Our role is to ensure that SMEs can access the appropriate finances throughout their life-cycle, from early stage (including micro firms) through MFI, through seed and venture capital, credit guarantees and counter guarantees, and through prompt payments.
Access to Credit
It remains the responsibility of the banking system to provide credit to businesses. However, Government is prepared to offer some additional targeted supports where there are market failures.
SME Credit Guarantee Scheme
Under 2012 primary legislation the SME Credit Guarantee Scheme 2012 was launched by the Government, in the context of its work in restructuring the Irish banking system, and to assist viable SMEs on the margins of commercial lending decisions in accessing credit. It provided for a 75% State guarantee to banks against losses on qualifying loans to micro, small and medium enterprises with growth and job creation potential. Bank of Ireland, AIB and Ulster Bank participated in the Scheme.
The 2012 Scheme was reviewed in 2013-2014, and some reforms were contained in the 2015 Scheme, including extending the terms of loans from 3 to 7 years, and extending its use to cover refinancing of loans of banks exiting the Irish market.
More major reforms were provided for in 2016 amending primary legislation that led to the making of the Credit Guarantee Scheme 2017. New products will be rolled out by the Strategic Banking Corporation of Ireland (SBCI) which operates the Scheme on behalf of the Minister. The main provisions of the 2017 Scheme will be the increase from 75% to 80|% of the level of risk assumed by the State, and its extension to cover loans other than traditional bank loans (i.e., invoice discounting, factoring, lessors etc.).
Another major reform will be contained in a separate Counter Guarantee Scheme 2017 to be made by Ministerial SI this year, under which the Minister will be empowered to counter guarantee to the SBCI a portion of SMEs loans brokered in such a way as to allow the SBCI to leverage EU funding for Irish SMEs (i.e. COSME, InnovFin, EFSI etc.).
We are currently developing and implementing (subject to Government approval) measures to support the medium and long term financing needs of SMEs impacted by Brexit (including guarantee schemes to support working capital and longer term development needs of SMEs).
Microenterprise Loan Fund
The Microenterprise Loan Fund was launched in 2012 to improve access to credit for Microenterprises, and facilitate the growth and expansion of viable businesses from all industry sectors across the country, which have been refused access to credit from the banks.
The Fund provided support in the form of loans via Microfinance Ireland (MFI) for up to €25,000, available to start-up, newly established, or growing microenterprises employing less than 10 people, with viable business propositions, that do not meet the conventional risk criteria applied by banks. The potential viability of the business proposal will be the dominant factor in all credit decisions.
A 2015 Review resulted in reforms, in particular the removal of a previous requirement that micro firms had to have been refused a bank loan before recourse to MFI, and that has led to a significant and consistent growth in the take up of this form of finance by micro enterprises.
In addition, the Minister made provision in the last Departmental budget of equity funding ensuring that MFI continues to roll out finance for micro firms for another 5 years, 2017-2021.
Credit Review Office
The Credit Review Office was established by Government in 2010 to provide a simple and effective review process for small and medium-sized enterprises (SMEs), sole traders and farm enterprises refused credit from the banks that were, at that time, participating in the NAMA scheme. Since then, other banks have voluntarily joined the process. The banks currently covered are Allied Irish Bank, Bank of Ireland, PTSB and Ulster Bank.
The Credit Review Office job is to form an independent, impartial opinion on whether your business is viable and will generate enough cash to repay the loan.
The Credit Review Office has no statutory or regulatory powers to overturn bank lending decisions. However, if it is the Credit Review Office’s view that the lending could have been made within acceptable risk boundaries, the bank will be required to comply with this recommendation or explain to the Credit Review Office why it will not do so. In over 90% of the cases supported by the Office, the banks have accepted the Credit Review Office Opinion and complied with the recommendations.
As part of its remit, the Credit Review Office publishes regular reports for the Minister for Finance on the outcome of its appeals process. This is in order to inform Government of the performance of the credit systems in participating banks.
State Financial Support for SMEs in Ireland
For information on supports available to SMEs in Ireland please see the Supporting SME tool at www.supportingsmes.ie which sets out the full range of Government financial and other supports.
There are over 170 different Government supports for Irish start-ups and small businesses.
Supportingsmes.ie is a cross-governmental initiative to help Irish start-ups and small businesses navigate the range of Government supports to see which you could possibly apply for. By answering the eight quick questions in the Online Tool, a small business will, in one location be able to:
- Find out which of the over 170 Government business supports from 27 different Government Departments, Agencies and Initiatives are available to them;
- Obtain information on the range of Government supports for accessing credit;
- Be told their nearest Local Enterprise Office to discuss the outcomes of the guide further, and;
- Be able to download all these filtered results into a document for their further use.