Farmers, fisheries, and food businesses will be eligible for a new Government-backed loan scheme offering between €25,000 and €1.5 m.
The loan scheme was unveiled on Monday by Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, the Minister for Agriculture, Food and the Marine, Charlie Mc Conalogue, and the Minister for Finance Paschal Donohoe.
The Covid-19 Loan Scheme (‘CLS’) scheme aims to help SMEs access low-cost finance, recognising that many of them are still getting back on their feet after what has been an incredibly challenging few years.
Loans of between €25,000 and up to €1.5m are available, with terms of one to six years and unsecured up to €500,000.
Finance provided is competitively priced and some refinance can be availed of to help with any existing short-term credit a business may have.
It follows the closure of the Covid-19 Credit Guarantee Scheme (CCGS) at the end of June 2022, which is a consequence of the cessation of the European Commission’s Covid-19 State-Aid Framework at this time.
As of the end of May 2022, the CCGS had helped 10,357 SMEs in Ireland with access to finance of €730.2m.
The Tánaiste said: “There are currently more people employed in Ireland than ever before in the history of the state. That would have been unimaginable a few months ago even.
“However, many businesses are still getting back on their feet after what has been an incredibly challenging period. I know Putin’s war on Ukraine has caused more uncertainty.
“These State-backed loan schemes are working well. The existing Covid Credit Guarantee Scheme helped more than 10,000 SMEs access low-cost credit.
“This successor scheme will give SMEs, including farmers, fishers and food businesses, the option to access really competitively priced loans, should they need to avail of that option, in addition to the other help that is available. It’s about giving SMEs as many options as possible.”
The scheme is delivered by the Strategic Banking Corporation of Ireland (SBCI), through participating lenders and information on the application process can be found on the SBCI website.
The CLS benefits from support from the European Investment Bank Group through the European Commission’s “European Guarantee Fund”.
Interest rates on loans provided under the scheme will be lower than is otherwise typically available on similar lending in the market, however, these will vary according to the lender.
Lenders participating in the scheme are separated into two cohorts:
For the first, interest rates will be variable, but are capped at an initial maximum rate of 3.7% for loans less than €250,000 and 2.75% for loans of €250,000 and above.
For loans from the remaining lenders, a minimum discount of 1% relative to their standard rates will be required to for loans under the CLS.
Minister for Agriculture, Food and the Marine, Charlie Mc Conalogue TD said the loans will help rural businesses through difficult market conditions.
“The resilience shown by the agri-food sector during the pandemic was remarkable as it continued to produce high-quality produce for consumers at home and abroad,” he said.
“This State-backed source of finance will complement other measures introduced by my Department to alleviate the considerable impact of the pandemic on the agri-food sector.”
Minister for Finance Paschal Donohoe said: “As well as working capital, loans can be used for investment and I urge businesses to exploit such investment opportunities to grow, develop and embrace digital and climate transition.”
The scheme is available to eligible SME and small Mid-Cap businesses, including primary producers (businesses engaged in farming and fishing), established in Ireland.
To be eligible, businesses must have experienced an adverse impact with a minimum loss of 15% in turnover or profit due to Covid-19.
Loans can be used for Liquidity/Working capital; Investment; and Refinancing: Up to 30% of new loans may be allowed for refinancing of existing short-term credit. For example, as arising due to Covid-19 impacts.