Leo Varadkar (Dublin West, Fine Gael)
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The COVID-19 Credit Guarantee Scheme has been in operation since September 2020. A total of €617 million in loans has been drawn or approved by over 8,800 businesses up to the end of 2021, maintaining over 63,000 jobs. Businesses which have been most impacted by the effects of COVID-19 are drawing the most loans; the wholesale and retail sector, the accommodation and food services sector, the construction sector and the primary agriculture and fisheries sector account for 58% of all loans drawn under the scheme.

The scheme is available to SMEs and small mid-caps through three commercial banks, six non-bank lenders and nineteen credit unions. It continues to provide vital access to finance for businesses with low-cost loans and loans of up to €250,000 available without the need for security.

Schemes operating under the Credit Guarantee Act, which includes the COVID-19 Credit Guarantee Scheme, are based on contingent liability. This means that there is no cost to the State unless a participating enterprise is unable to pay back the loan and the finance provider calls on the guarantee for 80% of the outstanding balance. The contingent liability at 31 December 2021 was €395 million and actual claims paid in respect of defaulted loans at the end of 2021 amounted to €252,346.

The Scheme has been developed in accordance with the European Commission’s State Aid Temporary Framework and has been extended three times since September 2020. The last extension was in December 2021 and makes the scheme available until 30 June 2022. Any further extension of the scheme beyond that point is dependent on an extension of the Temporary Framework. I would therefore encourage businesses to avail of these low-cost loans in the remaining time of the scheme, which can be used for both working capital and investment purposes.