IFA calls for Covid-19 credit scheme to be extended

The Irish Farmers’ Association (IFA) has called on the government to seek an extension of the EU Temporary Aid Framework, to enable the Covid-19 Credit Guarantee Scheme (CCGS) to be extended beyond the end of the year.

IFA farm business chair Rose Mary McDonagh said:

“The CCGS must be expanded and extended into next year to support farmers. The effects of the pandemic show no sign of letting up and the risk of a no-deal Brexit looks increasingly likely.

“In 2019, €4.4 billion or 33% of Irish agri-food exports went to the UK. A hard crash-out by the UK from the EU will have a devastating impact on Irish farmers and we need the necessary support from government to cover these losses.

An expanded CCGS that is available beyond the end of this year should be an element of a much-needed safety net.

The CCGS is a €2 billion fund overseen by the Strategic Banking Corporation of Ireland (SBCI) which benefits from an 80% guarantee by the state.

The fund is available for low-cost lending to small businesses that have been adversely impacted by Covid-19. Currently AIB, Bank of Ireland and Ulster Bank are participating in the scheme.

McDonagh adds: “Any farmer whose business was negatively affected by Covid-19 in any way may be eligible to apply for a loan under the scheme.

“It is well worth speaking to your local bank to determine if you are eligible. The money can be drawn down very quickly and repayments can be spaced out over a period of up to five and a half years. Moreover, the banks are very keen to lend out the funds at their disposal,” she said.

The IFA says that with an initial focus on term and working capital loans, the CCGS facilitates the provision of liquidity and working capital to businesses.

Crucially, loans under the scheme will be unsecured up to €250,000. Interest rates vary from bank to bank but are attractive across the lenders participating in the scheme.

However, under current rules, the scheme will no longer take applications from the end of 2020.

McDonagh said: “The CCGS is vital in providing low-cost credit and cash-flow to businesses that have suffered as a result of the pandemic. However, firstly, the scheme must be extended in 2021 to help farmers better cope with the financial impact of Covid-19.

“Together with this extension, the purpose of the loan scheme must also be expanded to include losses from the likely economic fallout of Brexit next year,” she concluded.