Thursday, 3 June 2021
Department of Enterprise, Trade and Employment
The Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 was signed into law by the President on the 25th of May 2021 and I will be signing the Commencement Order that brings this legislation into effect this week. This legislation will provide myself and the Minister of Agriculture, Food and the Marine with the powers to enter into a legal agreement with the Strategic Banking Corporation of Ireland (SBCI) for the delivery of the Brexit Impact Loan Scheme.
An Open Call to lenders has been launched by the SBCI to invite expressions of interest from banks and non-bank lenders to participate in the Brexit Impact Loan Scheme. This Open Call will remain live until the 9th of June, after which a review process will determine successful applicants.
The Brexit Impact Loan Scheme will be underpinned by a counter-guarantee from the European Investment Fund [EIF] through the pan-European Guarantee Fund. The effect of this counter-guarantee is that the EIF will take a risk share of 56% for the scheme, with SBCI taking 24% and lenders for the scheme taking a 20% risk share.
A number of legal agreements need to be in place for the scheme to launch. Negotiations on the counter-guarantee between the EIF and the SBCI are already under way, while the cooperation agreement between myself and the Minister for Agriculture, Food and the Marine and the SBCI for delivery of the scheme is also being developed. Guarantee agreements between the SBCI and each of the lenders successful in their application for participation in the scheme will also need to be completed.
It is anticipated that the first lenders under the Brexit Impact Loan Scheme will launch in the early half of July 2021, with further lenders coming on board as soon as possible thereafter.
The Brexit Impact Loan Scheme will replace the existing Brexit Loan Scheme. This new scheme will provide for a number of enhancements for Brexit-impacted SMEs seeking to access finance, including: removal of the innovation eligibility criterion, providing funding for primary producers, offering longer loan terms of up to six years, and lending for a wider range of loan purposes, including refinancing (of remaining Brexit Loan Scheme loan balances and for existing short-term credit up to a maximum of 30% of any new loan) and financing to support cash flow and for investment.
The enhanced scheme has been developed in the context of the additional complexities and implications that the COVID-19 pandemic has brought about for Brexit impacted businesses, and will be an important instrument in ensuring that Brexit impacted SMEs have an appropriate option for accessing low cost lending as the impacts of Brexit and COVID-19 continue to be felt.