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 offers additional targeted supports where there are market failures.
Click on the map* to view the nationwide loan figures for Microfinance Ireland (MFI) and the Credit Guarantee Scheme (CGS)
*Please note that this tool may not be supported by legacy browsers including IE11
The Department has recently produced two guides which you may find useful:
This simple guide sets out the types of equity and debt financing supports and resources available to business at all stages of the business cycle.
This Government of Ireland Currency Risk Management guide answers many of the questions that Irish SMEs may have when assessing and managing their exposure to foreign currency risk.
Brexit Loan Scheme
The Brexit Loan Scheme is a €300 million loan scheme offering competitively priced loans to eligible Irish SMEs and small mid-caps of up to 499 employees. The Scheme was launched at the end of March 2018 and will run for two years. It will run on a first come, first served basis, subject of course to eligibility. Scheme features include:
- Loan amount from €25,000 up to a maximum of €1,500,000
- Loan term of up to 3 years
- Loans less than €500,000 will be unsecured
- Interest rate of 4% or less
- Optional interest-only repayments provided at the start of the loans
- Loans can be used for future working capital requirements and to fund innovation, change or adaption of the business to mitigate the impact of Brexit
Who can apply
Eligible businesses of up to 499 employees, active in the Republic of Ireland, which are demonstrably exposed to negative impacts as a result of Brexit.
Approval of all loans is contingent on meeting the credit assessment criteria of the finance provider.
How to apply
Businesses must apply to the Strategic Banking Corporation of Ireland (SBCI) to confirm their eligibility for the scheme. As part of the process, businesses must submit a business plan, demonstrating the means by which they intend to innovate, change or adapt to meet the challenges posed by Brexit. Guidance is available on the SBCI website on how to complete a business plan.
SME Credit Guarantee Scheme
The revised SME Credit Guarantee Scheme 2017 was launched by the Government in July 2018. The scheme 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 an 80% guarantee (previously 75%) to participating finance providers (currently AIB, Bank of Ireland and Ulster Bank) on qualifying facilities 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.
- Loan size: from €10,000 to €1 million
- Loan Term: up to 7 years
- Loan type: 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.).
Credit Guarantee Scheme and the Customs Transit Procedure
Once the UK leaves the European Union, goods transiting the UK will be subject to duties entering the UK and again when exiting the UK. Four declarations will be needed (leaving Ireland, entering the UK, leaving the UK and entering another Member State).
SMEs may avail of a Revenue customs transit procedure. This allows goods to be moved from one Member State to another via a third country while protecting the customs status of the goods. However, to use the Customs Transit Procedure a business must have a Revenue-authorised Comprehensive Guarantee, which covers transit through third countries, which the UK will be post-Brexit. Importantly, to avail of the transit element of this guarantee, an SME must have in place an equal financial guarantee from a bank, to cover actual customs debts such as customs and taxes associated with goods transiting the UK. Without such financial guarantee, businesses will not be able to use the transit customs procedure – which would give rise to costs and disruption for those businesses.
To help SMEs, the Government have repurposed the Credit Guarantee Scheme (CGS) to provide counter guarantees to the banks, mitigating credit risk or need for collateral. The Credit Guarantee Scheme can now be used by businesses to back their financial guarantee from a bank. The Credit Guarantee Scheme can be availed of through Bank of Ireland, Ulster Bank and AIB.
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 is administered by Microfinance Ireland (MFI) who make loans of up to €25,000 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.
To be eligible for a loan, applicants must submit a business plan, must have a commercially viable proposal, and must have the capacity to repay the loan.
Scheme features include:
- Loan amount from €5,000 up to a maximum of €25,000
- Loan term of up to 3 years (5 years for business expansion loans)
- Free mentoring (where deemed appropriate)
If you are a microenterprise and want to access a loan from the Microenterprise Loan Fund, you can apply directly to Microfinance Ireland.
Future Growth Loan Scheme
The Future Growth Loan Scheme makes up to €300 million of loans available with a term of 8-10 years. This scheme will be available to eligible businesses in Ireland and the primary agriculture (farmers) and seafood sectors to support strategic long-term investment. Finance provided under the scheme will be competitively priced and have favourable terms.
The initial maximum interest rate is capped at 4.5% for loans up to €249,999 and 3.5% for loans more than or equal to €250,000 for the first six months. The rates thereafter are variable and will be dependent on the cost of funds at that point in time, however the credit margin component of the price has been capped. These rates represent a significant saving compared with the prevailing rates that are otherwise being offered for similar loans on the market.
Loans will range from €100,000 (€50,000 for farmers) to €3 million per eligible business, with unsecured loans up to €500,000.
The Future Growth Loan Scheme is offered by the Government of Ireland, through the Department of Business, Enterprise and Innovation and the Department of Agriculture, Food and the Marine, the Strategic Banking Corporation of Ireland, supported by the EIB Group’s Guarantee Facility.
The scheme is operated by the Strategic Banking Corporation of Ireland (SBCI) through participating lenders.
Credit Review Office
The Credit Review Office (established by Government in 2010) provides a simple and effective review process for small and medium-sized enterprises (SMEs), sole traders and farm enterprises refused credit from Allied Irish Bank, Bank of Ireland, PTSB and Ulster Bank.
If you have been refused credit from one of these banks, you can apply for a review to The Credit Review Office, who will 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, they conclude 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.
For any further queries, please contact FinanceForGrowth@dbei.gov.ie.