All you need to know about the €300 million Brexit Loan Scheme

A €300 million Brexit Loan Scheme – which was confirmed in Budget 2018 – will aim to provide affordable financing to Irish businesses that are either currently impacted by Brexit or will be in the future.

Funding for the scheme was secured by the Minister for Agriculture, Food and the Marine, Michael Creed, in partnership with An Tanaiste and the Minister for Business, Enterprise and Innovation, Frances Fitzgerald.

The €300 million needed for the scheme is set to be leveraged through a combination of state and EU guarantees, at a cost to the exchequer of €23 million.

It is believed that €14 million will be provided by the Department of Business, Enterprise and Innovation and that the remaining €9 million will be provided by the Department of Agriculture, Food and the Marine.

The new scheme is scheduled to be delivered by the Strategic Banking Corporation of Ireland (SBCI) through commercial lenders, in order to get much needed working capital into Irish businesses.

It is hoped that up to €300 million will be made available to businesses with up to 499 employees at a proposed maximum interest rate of 4% – but participating lenders may compete below this level.

Running for two years, the fund will provide loans for up to three years. The terms and conditions are set to be designed to ensure the loans are accessible.

The scheme is set to be open to both state agency clients and those businesses that do not have any relationship with state agencies. The finance is expected to be easier to access, more competitively priced, and at more favourable terms than current offerings.

At least 40% of the fund will be available to food businesses, the Department of Agriculture, Food and the Marine added.

Meanwhile, the development of a longer-term ‘Business Investment Scheme’ is being examined by both departments. It is thought that this scheme would focus on business development to support enterprises in investing strategically for the post-Brexit environment.

But – due to state aid rules – the scheme will not be available to farmers and fishermen. An alternative scheme for primary producers in the agriculture sector and fishermen is currently under consideration by the Department of Agriculture.

Will you be eligible?

Applications will be cleared for scheme eligibility through the SBCI.

In order to be eligible, applicants must be exposed to the (current or potential) impacts of Brexit and they must also submit a business sustainability plan which demonstrates that they plan to adapt/innovate/change in response to Brexit.

Loans – which will be provided by commercial lenders, subject to normal lending criteria – must be for the purpose of supporting working capital or cash flow needs.

The SBCI is thought to have issued an open call inviting lending institutions to signal their interest in participating in the scheme.

The scheme is expected to be in place by March 2018 and it is anticipated that the scheme will remain open until March 2020. Further details of the loans will be provided over the coming weeks.

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