Enhanced Credit Guarantee Scheme Launched

IFB Strategy Report by Crowe Horwath Ireand

Minister for Employment and Small Business, Mr Pat Breen TD, recently announced the launch of the new Credit Guarantee Scheme 2017.

The scheme is a Government initiative that was set up to encourage additional lending to commercially viable SMEs which, under normal lending criteria, are unable to obtain new or additional facilities from their bank. The scheme facilitates this by providing banks (current participating lenders are AIB, Bank of Ireland and Ulster Bank) with a Government-backed guarantee for a proportion of the facility value.

Since 2012, under support from the Credit Guarantee Schemes some €65 million in bank loans were approved for over 400 SMEs – for working capital, purchase of premises or equipment, product or service development, etc– and created or supported an estimated 2,500+ Irish jobs.

A recent review, aimed at finding ways to further improve take up by SMEs of finance from this source, has led to a number of reforms:

  • Increase the level of risk of the State will take (80% of individual loans), so as to make it more attractive for finance providers to lend to SMEs
  • Extend the scope to cover other financial product providers too, like lessors, invoice discounters etc
  • Extend the definition of loan agreements to include non-credit products such as invoice finance and leasing, and to include overdrafts

The Scheme will be operated by the Strategic Banking Corporation Ireland. Further details and information on the Scheme will be available from DJEI and the SBCI websites.