Damien English (Meath West, Fine Gael)
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Since the onset of the pandemic, my Department has worked to ensure that there are schemes in place to help businesses to access appropriate financing in response to the challenges presented trading in the environment brought about by COVID-19. Initially, this meant the adaptation or expansion of existing schemes to ensure support could be in place as quickly as possible. These schemes included the COVID-19 Working Capital Scheme, MicroFinance Ireland’s COVID-19 Business Loans, and the Future Growth Loan Scheme.

These were followed by the €2 billion COVID-19 Credit Guarantee Scheme, which was developed as a tailored loan support for COVID-19-impacted businesses and is the largest such scheme in the history of the state.

This scheme was developed with the specific goal of widening the pool of participating lending institutions. To that end, the participating finance providers under the scheme include three banks, four non-bank lenders, and nineteen credit unions. Work is under way to bring more non-bank lenders into participation under the scheme, further broadening the options for businesses seeking to access appropriate financing in response to the impacts of the pandemic.

The proposal outlined in your query specifies a scheme not to be delivered through the major banks, however the delivery of these loan guarantee schemes through existing finance providers allows the Government to leverage existing lending infrastructure that these lenders have in place around the country, ensuring accessibility for impacted businesses.

The scheme’s spread across bank and non-bank lenders provides an efficient mechanism for making competitive lending products available to COVID-19-impacted businesses. There are some businesses in sectors or regions that may have difficulty in accessing financing from specific types of lender, and as such it is considered prudent to ensure that a range of finance providers be involved, including the major banks.

The COVID-19 Credit Guarantee Scheme has seen strong uptake since its launch in September of 2020. To date (8 April), the scheme has seen with 4170 loans drawn, to a total value of €255 million.

I want to assure you that I and my colleagues across Government are continuing to keep the range of supports for businesses under review.

Damien English (Meath West, Fine Gael)
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Since the onset of the pandemic, my Department has responded by working quickly to introduce supports for affected businesses, including in the form of loan guarantee facilities for SMEs.

MicroFinance Ireland’s COVID-19 business loans were launched for micro-enterprises that had been affected by the pandemic, while the COVID-19 Working Capital Scheme made loans available to SMEs as they sought to innovate, change or adapt in response to these challenges. These schemes were put in place as quickly as possible by repurposing and expanding existing loan guarantee schemes.

In July of 2020, the Future Growth Loan Scheme was expanded by €500m. This scheme offers state guaranteed loans for terms of 7-10 years to businesses seeking to make long-term investments. It has seen strong uptake since its expansion, and this is an indication that businesses are planning and making investment for a post-COVID-19 environment.

While these adapted supports were deployed as quickly as possible, work was also under way on the development of a tailored loan guarantee scheme to fit the specific needs of COVID-19-impacted businesses. Launched in September of 2020, the COVID-19 Credit Guarantee Scheme makes up to €2b in lending available to businesses that have been negatively impacted by the pandemic for terms of up to five-and-a-half-years. Where eligible, the scheme also allows for the re-financing of other COVID-19-related debt.

The COVID-19 Credit Guarantee Scheme was developed with the specific goal of widening the pool of participating lending institutions. To that end, the participating finance providers under the scheme include three banks, four non-bank lenders, and nineteen credit unions. Work is under way to bring more non-bank lenders into participation under the scheme, further broadening the options for businesses seeking to access appropriate financing in response to the impacts of the pandemic.

This delivery of the scheme through commercial finance providers offers an efficient mechanism for making competitive lending products available to COVID-19-impacted businesses. However, the operation of loan schemes through commercial finance providers also means that there is less scope to bring the interest rates down further than they are at present, as some interest must be charged by lenders if they are to cover overheads and capital costs if they are to continue to work with Government.

It should be noted that 96% of loans drawn under the scheme have been provided at interest rates of between 2.5% and 2.99%. Moreover, the loan guarantee schemes described above allow for interest-only payment periods, depending on the participating providers’ assessment.

The loan guarantee schemes in place for COVID-19-impacted SMEs have seen strong uptake to date, while the range and variety of these schemes ensures that there are options in place to provide that businesses have access to more appropriate financing for their specific COVID-19 needs.

I want to assure you that I and my colleagues across Government are continuing to keep the range of supports for businesses under review.