Written answers

Monday, 9 September 2024

Department of Enterprise, Trade and Employment

Brexit Supports

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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484.To ask the Minister for Enterprise, Trade and Employment if it is open to a participating lending institution under the Strategic Banking Corporation of Ireland Covid-19 loan scheme to extend the term of the loan or offer any form of restructure to an existing borrower under the scheme; if the terms of the guarantee provided by the Government enable or prevent such flexibility; if he has any plans to make changes in that regard; and if he will make a statement on the matter.[35437/24]

Photo of Peter BurkePeter Burke (Longford-Westmeath, Fine Gael)
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In October 2021, the Department of Enterprise, Trade and Employment (DETE) together with the Department of Agriculture, Food and the Marine (DFAM) launched the €330m Brexit Impact Loan Scheme.

This scheme was widened by Government to allow access to COVID-19 impacted SMEs. The Covid Loan Scheme was launched on 4 July 2022 to ensure that an appropriate option for access to finance remained in place for SMEs as the COVID-19 Credit Guarantee Scheme closed at the end of June 2022 due to the cessation of the EU State aid Framework under which it operated. The Covid-19 Loan Scheme closed to new applications on 31 December 2022.

The COVID Loan Scheme is operated by the Strategic Banking Corporation of Ireland (SBCI) and backed by a guarantee of the European Investment Fund (EIF). A participating lending institution may extend the term of a loan or restructure provided it meets obligations and conditions imposed by the EIF.

Those conditions include a requirement that any amendment to a loan agreement is consistent with the lender’s own credit and collection policies. In other words, if the lender were to restructure or otherwise change the conditions of a borrower’s agreement and that agreement benefits from an EIF guarantee, then it can do so provided it would have done the same thing with an unguaranteed loan. Any such actions by a lender must be designed to improve the “collectability of any claims” or to avoid any default by the relevant borrower.

Furthermore, if any of the conditions which makes the borrower’s loan eligible for EIF’s guarantee are modified by the lender as a result of a restructuring, then those conditions must still respect relevant guarantee scheme eligibility criteria e.g. if the term of the borrower’s loan were three years, then that term may (subject to a number of conditions outlined below) be extended by 3 years but not beyond the maximum permissible tenor under the guarantee scheme of six years.

There are specific conditions with respect to maturity extensions too that apply in the cases where a lender either agrees or refuses to grant that extension. In particular, that the customer agreement specifically provides for an ability to request an extension, that the borrower has the right to prepay the loan if an extension is refused, and that any extension is not conditional on or cause an increase in the interest rate.

Any extension of an agreement must not extend the maturity of the agreement beyond six years and in any event not beyond 31 December 2027.

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