Louise O'Reilly (Dublin Fingal, Sinn Fein) | Oireachtas source

I move amendment No. 2:

In page 4, between lines 30 and 31, to insert the following: “(5) The Minister shall, ensure that monies loaned in accordance with the Ukraine credit guarantee scheme shall—

(a) be loaned interest free with zero repayments for the first 12 months of the loan, and

(b) cap interest rates on such loans at 2.5 per cent.”.”.

The interest rates charged on the loans are normal business loan rates from the respective banks with an additional charge which comes because of the Government guarantee. The Department of Enterprise, Trade and Employment, funding the scheme through the guarantee, plays no role in the application or decision-making process which is fully delegated to participating lenders. As a result, the loans are issued, operated and overseen by the respective banks. In other words, the banks administer the scheme, they make decisions on whether to issue loans based on their own for-profit criteria for loan insurance and not the criteria of the Department.

We are debating this Bill today because we need a scheme that specifically helps businesses during the current inflation crisis and the crisis caused by the Russian invasion of Ukraine. While the Bill tries to address this, we are submitting this amendment to further strengthen the loan scheme. We have called for interest rates to be capped at 2.5% instead of 2.75% as was the case with the Covid-19 credit guarantee scheme. We also believe it would be a major incentive if the loans were interest free with zero repayments for the first 12 months. As the Minister of State knows, these companies are only now coming out of a very tumultuous and difficult period of trading. Having zero repayments for first 12 months would incentivise people to take them up. People are understandably very careful and very worried about taking on additional debt. Some of these people are only just getting out from the debt they incurred following the 2008 financial collapse.

As we know, it was standard practice for many of the Covid-19 credit guarantee loan schemes across the European Union to have 12 months with zero interest and no repayments. It would make a significant difference to this scheme if we could defer the interest rates for 12 months and it would go a long way towards assisting business. It would also recognise that some people will naturally be very cautious about taking on debt or additional debt as it will be from many of them.

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