Factsheet for case IE-2020-14/784 – Updated – measures in Ireland
|Country||Ireland , applies nationwide|
|Time period||Temporary, 01 April 2020 – 31 December 2021|
|Type||Legislations or other statutory regulations|
Supporting businesses to stay afloat
– Access to finance
|Author||Roisin Farelly (IRN Publishing) and Eurofound|
|Case created||25 April 2020 (updated 23 July 2021)|
|Related ERM support instrument|
The purpose of the SME Credit Guarantee Scheme for COVID-19 is to encourage additional lending to SMEs by offering a partial Government guarantee (currently 80%) to banks against losses on qualifying loans to eligible SMEs. The Credit Guarantee Scheme does not substitute for conventional lending that would otherwise have taken place. This is a repurposing of an existing SME credit guarantee scheme designed to assist SMEs to remain in business through the COVID-19 crisis.
The Credit Guarantee Scheme can be used by businesses to obtain loans to support changes they need to make to their business in response to COVID-19. It facilitates lending by commercial banks to SMEs by indemnifying banks against potential losses incurred from the lending.
Eligible entities for the credit guaranteed loans are viable micro, small and medium sized enterprises (SMEs). The lending decisions are made by the banks and not subject to government intervention.
The Scheme is targeted towards companies who are unable to access credit because of inadequate collateral, difficulty of accessing credit due to novel business market or technology or requirements to refinance given exit of SME lenders from the Irish market.
Loan facilities can be from €10,000 up to €1 million for terms of up to 7 years with the possibility of a three to six-month interest-only payment period (depending on the total loan duration). Borrowing SMEs pay an interest rate premium of 0.5% per annum (initially in 2019/20; rate may vary thereafter) to partially cover the state costs of the guarantee.
According to the Department of Enterprise, Trade and Employment: 3,285 applications were received for the scheme. As of 31st December 2020, 1,890 were approved with a total value of €98.19 million.
According to the Irish Times in January 2021, seven of the Republic’s largest credit unions and three non-bank lenders have signed up to participate in the Scheme. The scheme, initially launched through AIB, Bank of Ireland and Ulster Bank.
The Government announced in March 2021 that over 5,000 businesses had applied for the scheme and that the majority of businesses using the Scheme are those with under ten employees, in the Retail, Accommodation, Construction and Agriculture sectors.
|Does not apply to workers||
||Does not apply to citizens|
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Role||No involvement||No involvement|
|Form||Not applicable||Not applicable|
Social partners' role in the implementation, monitoring and assessment phase:
Social partners not involved - this is a national Government initiative.
Eurofound (2020), Credit guarantee scheme for COVID-19 for SMEs, case IE-2020-14/784 (measures in Ireland), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch
Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.