Thursday, 3 June 2021
Department of Enterprise, Trade and Employment
Covid-19 Pandemic Supports
191. To ask the Minister for Enterprise, Trade and Employment the steps he is taking to address the challenges being faced by business owners in accessing funding from banks and Microfinance Ireland as part of the credit guarantee scheme; and if he will make a statement on the matter. [1321/21]
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 (i.e. companies with fewer than 500 employees). It has given certainty to the lending market that funding is available and operates in accordance with the European Commission’s Temporary Framework for State Aid. This Framework has facilitated the speedy introduction of the CCGS but it also has eligibility criteria for the loans that must be met. These include the basis of the size of the loan based on turnover or staff wages and the requirement that the business must show potential future viability.
The CCGS was launched on the 7th of September last with AIB, BOI and Ulster Bank being the initial finance providers. All finance providers are required to demonstrate reduced interest rates to the participating business and there is no requirement for collateral or personal guarantees for loans up to €250,000. Finance providers utilise their own credit departments to assess future viability. They have the widest branch networks in the country and are closest to the businesses to determine this.
While there is a normal processing time between applications and drawdown, figures from the Strategic Banking Corporation of Ireland, who operate the CCGS on behalf of the government, show a steady increase in the number of loans and total weekly lending. Furthermore, new lenders have been successful in their application to operate loans under the CCGS, including a range of Credit Unions who are at the final stages of their legal agreements and operational set up.
In relation to the Microfinance Ireland, it operates its own loan book and is not a participant in any credit guarantee scheme. Owners of micro businesses with less than 10 employees can go directly to Microfinance Ireland or access their loans through the 32 Local Enterprise Offices. Currently, Microfinance Ireland are offering a COVID Business Loan, A Brexit Business Loan and their standard loans.
Finally, the CCGS is part of a suite of loans available to Irish businesses which includes the Brexit Loan Scheme and the Future Growth Loan Scheme. More widely, government has provided grants, rebates and employee assistances available to Irish business owners.