Wednesday, 20 May 2020
Department of Jobs, Enterprise and Innovation
Covid-19 Pandemic Supports
603. To ask the Minister for Jobs, Enterprise and Innovation the number of businesses by county which have drawn down Covid-19 loans according to each loan type available in tabular form; and if she will make a statement on the matter. [6349/20]
The SBCI Covid-19 Working Capital Scheme opened for eligibility applications on 23 March. The scheme is offered by my Department in cooperation with the Department of Agriculture, Food and the Marine. The scheme is operated by the SBCI through participating finance providers. It currently makes available a fund of up to €200m to eligible businesses that have been negatively affected by impacts arising from the outbreak of Covid-19 to enable those businesses to innovate, change or adapt in response to the current business environment. Following my announcement on 8 April, this scheme is now being expanded to make available an additional €250m in lending, which will bring the total amount of lending available under this scheme to €450m.
There has been strong appetite for the scheme such that as of 10 May 2020, there have been a total of 2,118 applications received to the COVID-19 WCS, of which 2,017 candidates were eligible and 13 ineligible. 88 applications are currently in process. Of those, 189 loans have progressed to sanction to a total value of €33.03 million.
Based on data currently available, Table 1 of the attached document provides details of the first €21.26 million of loan approvals under this scheme by county. Due to the newness of the scheme, drawdown data is not yet available.
The Future Growth Loan Scheme 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.
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 initial €300m funding for the FGLS scheme has been almost fully subscribed, supporting a significant level of strategic investment by businesses. One of the participating financial providers lenders has remaining capacity and businesses seeking loan approval are being directed towards this lender.
On 8 April 2020, I announced that this scheme would be expanded by a further €200m to facilitate longer-term lending to Covid-19-impacted businesses and my Department is working through the details of this expansion and will bring this funding to market as soon as possible.
Based on data available for the first €93.047 million of loans drawn down under the Future Growth Loan Scheme, 100% of these were by SMEs. Table 2 of the attached document provides details of €93.047 million worth of loans drawn down under this scheme on a per-county basis.
The Covid-19 Loan available from Microfinance Ireland (MFI) was introduced as a support to microenterprises to help them access funding during the Covid-19 crisis. Microenterprises are enterprises with less than ten employees.
These loans are available for eligible microenterprises responding to Covid-19-related difficulties, the negative impact of which must be a minimum of 15% of actual or projected income or profit. Loans up to €50,000 are available with terms that include a six months interest free and repayment free moratorium, with the loan to then be repaid over the remaining 30 months of the 36-month loan period. These loans are available at an interest rate of 4.5% to all micro-enterprises where the application is made through the Local Enterprise Network or referred by a bank or Local Development Committees. An interest rate of 5.5% is applied to loans which are sought directly from MFI.
Table 3 of the attached document provides a breakdown by county of loans sanctioned and drawn down under this scheme.
The Credit Guarantee Scheme is available to Covid-19 impacted businesses, it supports loans up to €1 million for periods of up to 7 years. The Scheme offers a partial Government guarantee of 80% to banks against losses on qualifying loans to eligible SMEs. The scheme is designed to support a range of debt products appropriate to the borrowing needs of SMEs. Term loans and other products such stocking facilities, performance bonds will be covered by the Scheme.
The interest rate charged on the loan will be the banks' SME lending rates. In addition, the borrower pays a premium which partially covers the cost of providing the guarantee. The premium can vary but is currently 0.5%. It may be possible to avail of between a three to six-month interest-only payment period, but this depends on the lender’s assessment of the application.
An application to access the Credit Guarantee Scheme can be made through one of the participating lenders which are currently Allied Irish Banks, Bank of Ireland and Ulster Bank Ireland. The Scheme is operated by SBCI, the Department plays no role in the application or decision-making process, which, is fully delegated to the participating lenders. The Credit Guarantee Scheme facilitates guarantees up to a maximum of €150 million in any one year.
There have been no approved facilities arising from Covid-19 submitted to SBCI from financial providers.
On 2 May, Government also agreed a new €2 billion COVID-19 Credit Guarantee Scheme as a further development of the existing Credit Guarantee Scheme already available from AIB, BOI and Ulster Bank. This scheme forms a major component of the government’s strategy to aid SMEs in these difficult times by providing critical support to ensure businesses are facilitated in having access to credit facilities to assist a return to a more regular trading environment. It will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years. The guarantee can be used for a wide range of lending products between €10,000 and €1 million that have a maximum term of 6 years or less. The Scheme will be available to all SME sectors, including primary producers and will have interest rates below current market rates. The implementation of this Scheme will require legislation, the drafting of which has been approved by Government.
I can assure the Deputy that I continue to work with my colleagues across Government to examine further supports to assist businesses impacted by Covid-19.