The Strategic Banking Corporation of Ireland (SCBI) has launched of a €400m low-cost loan fund for SMEs.

The new lending scheme is a State backed initiative aimed at offering competitive rates to assist with new long term working capital and capital investment finance.

Independent SMEs with less than 250 employees and a turnover of less than €50 million or a balance sheet of less than €43 million will be eligible to apply for funding.

The funding can be used for a number of activities to develop a business such as the purchase, renovation or extension of the business premises or for IT infrastructure or Research and Development expenses.

The term loan specifications set out for the new funding include a minimum loan amount of €25,000 with a maximum loan amount of €5 million and the term of the loan facility from a minimum of two years to a maximum of ten years.

Welcoming the announcement IFA President Eddie Downey said it was particularly encouraging that the farming and agri business sector will have access to this money through the pillar banks.

Downey said the farming sector would be looking for a number of elements in the funding package announced.

“Specifically, farmers expect the loans to be flexible, allow for ease of access, offer lower rates than that currently available and be in a position to cater for variable scales of investment on farms.

The IFA President said farmers planning to invest in growing their farm business should ensure that they look to access this lower-cost finance from their local AIB or BOI branch.

He said the funding will be available for between two and 10 years from early March. One of the pillar banks has confirmed to IFA that they will be offering money from the fund at 4.5%.

Eddie Downey said significant investment is planned on farms with the abolition of milk quota and the rollout of the RDP TAMS programme. It is expected that there will be strong demand from the farming sector for matching funding via the banking system over the coming years”.