Farmers to be included in €2 billion credit scheme

Farmers will be included in a €2 billion Credit Guarantee Scheme as part of a range of measures to support businesses across the economy in recovering from Covid-19.

The measures were announced today, Saturday, May 2, after a cabinet meeting. The €2 billion Covid-19 Credit Guarantee Scheme is aimed at supporting lending to small and medium enterprises (SMEs) for terms ranging from three months to six years, which will be below market interest rates.

Michael Creed, the Minister for Agriculture, Food and the Marine, said: “I welcome the announcement of the expanded Credit Guarantee Scheme. I have worked with my colleagues to ensure that our primary producers would be included in the new scheme and I am now happy to confirm that they will.

Cash-flow and liquidity is a key issue right along the food-chain and this scheme will give confidence to all businesses that assistance will be available when required.

The Credit Guarantee Scheme will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between three months and six years.

SMEs will be able to go directly to the banks in the scheme, and the guarantee can be used for a wide range of lending products between €10,000 and €1 million that have a maximum term of six years or less. It will be available to all SME sectors, including primary producers, the Government confirmed.

Interest rates will be below current market rates. This scheme “forms a major component of the Government’s strategy to aid SMEs in these difficult times”.

The Covid-19 Credit Guarantee Scheme is a further development of the existing Credit Guarantee Scheme which is already available from AIB, Bank of Ireland and Ulster Bank, and it will be possible for other lenders to get access to the scheme.

Lenders will be subject to a portfolio cap of 50%. This reduces the “contingent exposure” to the exchequer, meaning that the size of the scheme can be larger, a Government statement explained.

Implementing this scheme will require legislation, the drafting of which has been approved by Government.

In parallel with the drafting of the legislation and its passage through the Oireachtas, three Government departments (including Minister Creed’s) and the Strategic Banking Corporaton of Ireland will work to ensure that the scheme can be implemented “as soon as possible after the enactment of the legislation”, according to the statement.