Gerald Nash (Louth, Labour)
Link to this: Individually | In context | Oireachtas source

2. To ask the Minister for Enterprise, Trade and Employment the funding that has been drawn down by banks (details supplied) under the Covid-19 credit guarantee scheme established in 2020 to support small and medium sized businesses; and if he will make a statement on the matter. [2143/21]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The €2 billion COVID Credit Guarantee Scheme (CCGS) is the largest such scheme in the history of the state. Its purpose is to facilitate additional liquidity to SMEs, primary producers and Small Mid-Caps.

The Scheme operates in accordance with the European Commission’s Temporary Framework for State Aid. This Framework has relaxed the levels of state aid permissible to Irish businesses but also has eligibility criteria for the loans that must be met.

The CCGS provides certainty to businesses that liquidity is available for working capital and investment purposes with loans of up to €1 million available for up to five and a half years being provided at reduced interest rates by participating lenders.  Loans under €250,000 do not require collateral or personal guarantees.

The Scheme was launched in September with AIB, Bank of Ireland and Ulster Bank providing lending facilities.  These three banks have facilitated lending of €98.2 million up to the end of December 2020 to a wide range of business sectors across all counties in Ireland.   Businesses which have been significantly impacted by the effects of the virus are utilising the Scheme such as the wholesale and retail sector which accounted for twenty percent of loans drawn by value, the accommodation and food services sector which accounted for thirteen percent of loans drawn by value, and the primary agriculture and fisheries sector accounted for twelve percent of loans drawn by value.

Government provides an eighty percent guarantee on any claims under the scheme, thereby committing to pay the banks eighty percent of any outstanding principal on defaulted loans.  Banks will therefore not draw down any State funding until such time as there are defaults on loans and claims are submitted in accordance with the terms of the Scheme.  In order to make provision for potential claims, a contingent liability is created in respect of loans drawn.  The maximum contingent liability to the State in respect of loans drawn up to the end of December was €78.55 million.