The €2 billion Credit Guarantee Scheme is to be extended and will remain open for applications until the end of the year, the Government has announced.
The scheme is the biggest ever State-backed loan guarantee in Ireland. It offers an 80 per cent Government guarantee to participating lenders to provide Irish businesses, including those in the farming and fishing sectors, with access to low interest loans as they respond to the impacts of Covid-19.
Loans provided under the scheme range from €10,000 to €1 million for terms of up to five and a half years. Loans under €250,000 do not require any personal guarantees or collateral.
Interest rates will vary depending on the loan, however they will be lower than would otherwise be available in the market. To apply for the scheme, businesses can contact a participating finance provider directly.
Since the start of 2021, 19 credit unions and three non-bank lenders have also joined the scheme as finance providers. Three further non-bank lenders are nearing readiness in deploying funds through the scheme.
As of March 12th, some 5,271 loan applications have been made through the participating finance providers for loans under the scheme, amounting to €358.3 million.
Tánaiste Leo Varadkar said the scheme allows businesses to borrow more cheaply and without the usual personal guarantees that accompany traditional lending.
“Over 5,000 businesses have applied so far,” he said. “Government has agreed to extend it to the end of this year, giving businesses certainty and reassurance that this option will be available to them as they re-open.
“This extension will allow vulnerable but viable businesses get back on their feet. The majority of businesses using the Scheme to date have been those with under ten employees, in the retail, accommodation, construction and agriculture sectors.
“This scheme is just one of the ways we are helping, there is a package of grants, wage subsidies, tax relief, advice and training available to businesses who are struggling during this really difficult time.”
Minister for Finance Paschal Donohoe said the extension would “ensure ongoing availability of credit throughout the remainder of this year to our vitally important SME sector who are facing the significant challenges of not only Covid-19 but also adjusting to Brexit”.
“In particular, I welcome the recent expansion in the on-lenders to beyond the retail banks, including 19 credit unions spread between three groups and non-bank lenders,” he said.
“This extension means that more SMEs will be able to access credit from an increased diversity of sources in both bank and non-bank credit.”
Linked Finance chief executive Niall O’Grady said the company has already funded more than €7 million of loans to SMEs across the country.
“We are delighted that the scheme is being extended until the end of the year, providing more businesses with the opportunity to benefit from it as they look to recharge their businesses coming out of the pandemic,” he said.
“This gives SMEs the opportunity of ensuring all the work they have done to survive the Covid challenges is not lost or wasted.
“As the first non-bank lender approved under the scheme in January, we’ve had a huge response from SMEs and have already funded over €7 million of loans to SMEs across the country.
“The speed and simplicity of our offering means applicants can get a credit decision on unsecured loans of up to €250,000 within 24 hours of submitting their application.”
Participating lenders:
• AIB
• Bank of Ireland
• Blanchardstown and district Credit Union
• Capital Credit Union
• Capitalflow
• Cara Credit Union
• Carrickmacross Credit Union
• Castlecomer Credit Union
• Clonmel Credit Union
• Connect Credit Union
• Credit Union Plus
• Dundalk Credit Union
• Finance Ireland
• First Choice Credit Union
• Limerick and District Credit Union
• Linked Finance
• Mallow Credit Union
• Mullingar Credit Union
• People First Credit Union
• Progress Credit Union
• St Canice’s Credit Union
• Synergy Credit Union
• Tower Credit Union
• Ulster Bank
• Westport Credit Union
