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

I move amendment No. 3:

In page 5, between lines 10 and 11, to insert the following: “(4A) The Minister shall ensure that monies loaned in accordance with the Covid-19 credit guarantee scheme shall—

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

(b) interest rates on such loans shall be capped at 2.5%, with interest only being applied to cover the overheads of administering the scheme.”.

The interest rates charged on the loans are normal business loans rates from the respective banks with the additional 0.5% charge because of the Government guarantee. Furthermore, the Department of Enterprise, Trade and Employment, which funds the scheme through the guarantee, plays no role in the application or decision-making process, which is fully delegated to the participating lenders. As a result, the loans are issued at the respective banks' market interest rate. In other words - and this has been pointed out by trade unions and others - the banks now administer the scheme and make the decisions as to whether or not to issue loans based on their own for-profit criteria for loan issuance, and not the criteria of a Government Department. We are here today to debate a scheme designed to keep businesses afloat during a global pandemic. There is nothing in the scheme that speaks to the pressure thousands of businesses across the State are under. I put it to the Minister of State that we have discussed this previously and one of the things that keeps coming back to me when I engage with business owners, and especially small family businesses, is the absolute resistance to taking on additional debt and unsustainable debt. They are absolutely petrified of this. Businesses themselves have pointed out these flaws, so the Minister of State is more than well aware. Organisations such as Chartered Accountants Ireland have also had their say. They have highlighted at first hand the problems businesses have in accessing loans with such high interest rates as those provided by the scheme. They have stated that the Covid-19 credit guarantee scheme is too onerous and complex to administer, and that the interest rates are prohibitive. They say the interest rates need to be closer to the ECB rates than to commercial rates.

As the Minister of State already said, he will have no hand, act or part in that decision-making process.

Sinn Féin has been calling for similar low interest rates for a number of months. This was included in our letters to the Minister for Finance, in May, and to his predecessor. We have been calling for interest rates to be capped at 2.5% with interest rates preferably only applied to cover the overheads of administering the loan scheme. Low interest rates will encourage SMEs to take up the loans that are available. We have heard this first-hand from businesses and their representative bodies. They have also indicated that it would be a huge incentive and would help them greatly if the loans were interest-free, with zero repayments for the first 12 months. This is standard practice for many of the Covid-19 credit guarantee loan schemes across the EU. It would make a significant difference to the loan scheme here.

The Government should be looking at a payment deferral process to facilitate employers getting workers back to work and the economy going again. The deferral of interest even for 12 months would go a long way towards that. The acceptance of these measures would make the credit guarantee scheme loan scheme more attractive to business during this unprecedented and extremely difficult time. Unprecedented measures surely have to be the order of the day.

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