Thursday, 13 July 2023
Department of Enterprise, Trade and Employment
Employment Support Services
353. To ask the Minister for Enterprise, Trade and Employment if consideration will be given to the introduction of Government-backed low-interest rate loans for small to medium sized enterprises in Ireland; and if he will make a statement on the matter. [35003/23]
My department is actively working with the Strategic Banking Corporation of Ireland to deliver low-cost loan schemes to address market failures or emergency requirements for SMEs.
Ukraine Credit Guarantee Scheme (UCGS)
On the 30th of January this year, the Ukraine Credit Guarantee Scheme (UCGS) was launched as part of the government’s response to assist businesses effected by the crisis in Ukraine. The UCGS provides up to €1.2 billion in low-cost loans for purposes of working capital and medium-term investment, to SMEs, primary producers, and small mid-caps (businesses with fewer than 500 employees).
Loans under the scheme range from €10,000 to €1 million, for terms of up to six years, with no collateral required for loans up to €250,000.
The scheme is operated by the Strategic Banking Corporation of Ireland (SBCI) and is available from Bank of Ireland and Allied Irish Bank Group, with non-bank and credit union lenders joining the scheme in the coming months. The scheme will run until 31 December 2024.
The UCGS is similar to the very successful Covid-19 Credit Guarantee Scheme which was available from September 2020 until June 2022 and provided 9,857 loans with a value of €708 million to businesses impacted by the effects of the pandemic.
Growth and Sustainability Loan Scheme (GSLS)
The Growth and Sustainability Loan Scheme (GSLS) is a new long-term loan guarantee scheme which will make up to €500 million in low-cost investment loans of up to 10 years available to SMEs, including farmers and fishers and small mid-caps, with no collateral required for loans up to €500,000. A minimum of 30% of the lending volume will be targeted towards environmental sustainability. 70% of lending will be for strategic investments with a view to increasing productivity and competitiveness and thus underpinning future business sustainability and growth. It is anticipated that it will be launched in the market in the coming months.
The new Growth and Sustainability Loan Scheme (GSLS) is similar to the very successful Future Growth Loan Scheme (FGLS). This scheme, now ceased provided 3,512 sanctioned loans with a value of over €771 million.
Microfinance Ireland (MFI)
Microfinance Ireland (MFI) was established in 2012 to provide loans to microenterprises with fewer than 10 employees and with an annual turnover of less than €2 million, which do not meet the conventional risk criteria applied by commercial lenders. It provides much-needed funding to help microenterprises meet payments for stock, working capital requirements and other overhead expenses through the provision of low-cost lending facilities.
It provides loans of €2,000 up to €25,000 to businesses and applies interest rate charges for its lending which are not reflective of its credit risk. MFI also provides post approval mentoring services to its borrowers through the Local Enterprise Office Network. Since its establishment, and as of the 31st of May 2023, MFI has approved a total of 4,836 loans to the value of €79.8 million supporting over 10,000 jobs.