The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, the Minister for Agriculture, Food and the Marine, Charlie Mc Conalogue, and the Minister for Finance, Paschal Donohoe, have today (Monday, July 4) announced a further loan scheme to help small and medium-sized enterprises (SMEs) access low-cost finance.
The Covid-19 Loan Scheme (CLS) is a state-backed loan scheme, offering SMEs, including farmers, fishers, food businesses and small mid-caps, loans of between €25,000 and €1,500,000, with terms of one to six years and unsecured up to €500,000.
The government has said that finance provided is competitively priced and some refinance can be availed of to help with any existing short-term credit a business may have.
Tánaiste, Leo Varadkar said: “There are currently more people employed in Ireland than ever before in the history of the state. That would have been unimaginable a few months ago even.
“However, many businesses are still getting back on their feet after what has been an incredibly challenging period. I know Putin’s war on Ukraine has caused more uncertainty.
“These state-backed loan schemes are working well. The existing Covid-19 Credit Guarantee Scheme helped more than 10,000 SMEs access low-cost credit.”
Low-cost Covid-19 loan scheme
The Tánaiste added that this successor scheme will give SMEs, including farmers, fishers and food businesses, the option to access really competitively priced loans, should they need to avail of that option.
Minister Charlie Mc Conalogue said: “I am pleased that the Covid-19 Loan Scheme will be available to farm families, fishers and food businesses.
“The resilience shown by the agri-food sector during the pandemic was remarkable as it continued to produce high-quality produce for consumers at home and abroad.
“This state-backed source of finance will complement other measures introduced by my department to alleviate the considerable impact of the pandemic on the agri-food sector,” McConalogue added.
Minister for Finance Paschal Donohoe added: “Alongside the Brexit Impact Loan Scheme, the Covid-19 Loan Scheme will ensure that businesses continue to have access to longer-term unsecured lending as they deal with the impact of the pandemic.
“As well as working capital, loans can be used for investment, and I urge businesses to exploit such investment opportunities to grow, develop and embrace digital and climate transition.”
How to apply for the scheme
The scheme is delivered by the Strategic Banking Corporation of Ireland (SBCI), through participating lenders and information on the application process can be found on the SBCI website.
The CLS is in response to the required closure of the Covid-19 Credit Guarantee Scheme (CCGS) at the end of June 2022, which is a consequence of the cessation of the European Commission’s Covid-19 State-Aid Framework at this time.
As of end of May 2022, the CCGS had helped 10,357 SMEs in Ireland with access to finance of €730.2 million.
The CLS benefits from support from the European Investment Bank Group through the European Commission’s “European Guarantee Fund”.
Loan features
Loans under the scheme:
- Range from €25,000 to €1.5 million;
- Are available for terms of one to six years;
- Are available without security where the loan amount is less than €500,000;
- Typically feature a lower interest rate than other comparable lending in the market.
Loans can be used for:
- Liquidity/working capital.
- Investment;
- Refinancing – up to 30% of new loans may be allowed for refinancing of existing short-term credit, for example, as arising due to Covid-19 impacts.
Interest rates on loans provided under the scheme will be lower than is otherwise typically available on similar lending in the market and will vary according to the lender.
Lenders participating in the scheme are separated into two cohorts. For the first, interest rates will be variable, but are capped at an initial maximum rate of 3.7% for loans less than €250,000 and 2.75% for loans of €250,000 and above.
For loans from the remaining lenders, a minimum discount of 1% relative to their standard rates will be required to for loans under the CLS.