Written answers

Wednesday, 20 May 2020

Department of Jobs, Enterprise and Innovation

Future Growth Loan Scheme

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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517. To ask the Minister for Jobs, Enterprise and Innovation her plans to roll out additional funds for the SBCI future growth loan scheme in view of the fact it is maxed out through the pillar banks; and if she will make a statement on the matter. [6055/20]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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The Future Growth Loan Scheme currently makes up to €300 million of loans available with a term of 8-10 years and is operated by the Strategic Banking Corporation of Ireland (SBCI) though participating lenders. We have seen strong demand for the scheme since its launch in April 2019, resulting in a rapid take up of the scheme. Funding made available by the scheme facilitates long-term, strategic investment.

The scheme is open to eligible SMEs and small mid-caps (businesses of up to 499 employees), including those in the primary agriculture and seafood sectors. Loans under the scheme range from €100,000 (€50,000 for farmers) to €3m per eligible business, with loans of up to €500,000 available unsecured. The initial maximum interest rate is capped at 4.5% for loans up to €249,999 and 3.5% for loans more than or equal to €250,000 for the first six months.

As at 11 May 2020, the scheme has received 3,502eligibility applications, with 3,327 approved, 160 currently in process and 16 deemed ineligible. The initial €300m funding for the Future Growth Loan Scheme has been almost fully subscribed, supporting a significant level of strategic investment by businesses. One of the participating finance providers lenders has remaining lending capacity and businesses seeking loan approval under the scheme are being directed towards this lender.

On 8 April 2020, I announced that the Future Growth Loan Scheme would be significantly expanded by a further €200m to facilitate longer-term lending to Covid-19-impacted businesses.

Officials of my Department are engaging with the Department of Agriculture, Food and the Marine, the Department of Finance and the SBCI, as well as the European Investment Fund, to bring this funding to market as soon as possible, as I am conscious that Covid-19 has been a significant disruption for many businesses.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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518. To ask the Minister for Jobs, Enterprise and Innovation if legislation is needed in order for the pillar banks to issue loans under the SBCI future growth loan scheme. [6056/20]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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The Future Growth Loan Scheme (FGLS) was launched in April of 2019 and makes available a fund of up to €300m to eligible Irish businesses to fund strategic, long-term investment. The scheme was developed by my Department in cooperation with the Department of Agriculture, Food and the Marine. It leverages a guarantee from the European Investment Fund (EIF) and is operated by the Strategic Banking Corporation of Ireland (SBCI) through participating finance providers.

The scheme has been well received, and as at 8 May there have been 3,502 applications for eligibility under the scheme, of which 3,327 have been approved. The strong uptake of the scheme has meant that the initial funding of €300m has now been almost fully subscribed. To date, 1,045 applicants have progressed to sanction under the scheme.

On 8 April, I announced a €200 million expansion to the scheme.

The FGLS is underpinned by a 64% counter-guarantee from the European Investment Fund. This counter-guarantee provides significant risk protection to the Exchequer against potential losses from the loan guarantee scheme.  The FGLS was established using the European Investment Fund Agreement Act 2018. This Act allows for the Minister for Business, Enterprise and Innovation and the Minister for Agriculture, Food and the Marine to enter into agreements with the European Investment Fund (EIF) to facilitate access to finance for qualifying enterprises.

There is a limit of €75 million set out in the Act on the total value of agreements (for First Loss payments) that the relevant Ministers can enter into with the EIF. Capacity currently remains within the aggregate limit set out in the Act to allow for an agreement with the EIF in relation to the planned €200m expansion of the FGLS. Officials of my Department, the Department of Agriculture, Food and the Marine, the Department of Finance, and the SBCI are working to ensure this is available as soon as possible. 

However, the European Investment Bank (EIB) Group recently announced, as part of the European Union response to COVID-19, that it would be providing €25 billion in guarantees to underpin €200 billion in funding for member States to mitigate against COVID-19. For Ireland to be able to enter into additional agreements with the EIF, so as to leverage these EIB guarantees, will require an amendment to the aggregate limit set out in the European Investment Fund Agreement Act 2018.

So, while there is no legislation required to allow the pillar banks to issue loans under the Future Growth Loan Scheme, legislation changes would be required for further expansions of the FGLS beyond that which I have already announced.

Officials of my Department have been working urgently alongside the Office of Parliamentary Counsel on the drafting of legislation to amend the aggregate limit for agreements within the European Investment Fund Agreement Act 2018. The intention is that it will be progressed through the Oireachtas as a matter of urgency once a new Government is formed.

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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519. To ask the Minister for Jobs, Enterprise and Innovation if she, in partnership with the European Union European Fund for Strategic Investments and the SBCI, will further guarantee bank loans to SMEs under the future growth loan scheme; if this requires legislation to provide additional guarantees; and if so, the estimated timeline for same. [6057/20]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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The Future Growth Loan Scheme currently makes up to €300 million of loans available with a term of 8-10 years and is operated by the Strategic Banking Corporation of Ireland (SBCI) though participating lenders. Funding made available by the scheme facilitates long-term, strategic investment.

As at 8 May 2020, the scheme has received 3,502 eligibility applications, with 3,327 approved, 160 currently in process and 16 deemed ineligible. The scheme has seen significant uptake and the initial €300m funding has been almost fully subscribed, supporting a significant level of strategic investment by businesses. On 2 May, I announced an expansion to the Future Growth Loan Scheme of €200m. Officials of my Department, the Department of Agriculture, Food and the Marine, the Department of Finance, and the SBCI are working to ensure this is available as soon as possible. 

The scheme is underpinned by a 64% counter-guarantee from the European Investment Fund. This counter-guarantee provides significant risk protection to the Exchequer against potential losses from the loan guarantee scheme.  The FGLS was established using the European Investment Fund Agreement Act 2018. This Act allows for the Minister for Business, Enterprise and Innovation and the Minister for Agriculture, Food and the Marine to enter into agreements with the European Investment Fund (EIF) to facilitate access to finance for qualifying enterprises.

There is a limit of €75 million set out in the Act on the total value of agreements (for First Loss payments) that the relevant Ministers can enter into with the EIF. Capacity currently remains within the aggregate limit set out in the Act to allow for an agreement with the EIF in relation to the planned €200m expansion of the FGLS.

However, the European Investment Bank (EIB) Group recently announced, as part of the European Union response to COVID-19, that it would be providing €25 billion in guarantees to underpin €200 billion in funding for member States to mitigate the impact of COVID-19. For Ireland to be able to enter into additional agreements with the EIF, so as to leverage these EIB guarantees, will require an amendment to the aggregate limit set out in the European Investment Fund Agreement Act 2018.

Officials of my Department have been working urgently alongside the Office of Parliamentary Counsel on the drafting of legislation to amend the aggregate limit for agreements within the European Investment Fund Agreement Act 2018. The intention is that it will be progressed through the Oireachtas as a matter of urgency once a new Government is formed.

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