Government measures in key jurisdictions 2nd edition final pages - Flipbook - Page 49
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Ireland
Adrian Benson | adrian.benson@dilloneustace.i.e. | +353 1 673 1705
Contributor: Dillon Eustace
Loans and
financial
support
Has the
government put
in place any new
bank funding
schemes?
Yes. The COVID-19 crisis has prompted the Irish Government to announce a range
of supports for impacted businesses and individuals who are experiencing financial
difficulties during the COVID-19 pandemic. The range of measures introduced by the Irish
Government include the follows.
•
The Strategic Banking Corporation of Ireland (“SBCI”) COVID-19 Working Capital Loan
Scheme (the “Irish Liquidity Scheme”): the Irish Liquidity Scheme is designed to support
lending to Irish small and medium enterprises (“SMEs”) only and is not available to larger
firms. Loans under the Irish Liquidity Scheme (the “Loans”) can be provided to SME’s to
fund future working capital requirements in order to mitigate the impact of the COVID-19
pandemic. The Loans will be available through Allied Irish Banks, p.l.c., Bank of Ireland
and Ulster Bank in amounts of between €25,000 and €1.5m per eligible enterprise, with
a maturity of between one and three years. In addition, the Loans will bear a fixed rate of
interest negotiated with the lending bank, subject to a maximum of 4% per annum. For
loans of up to €500,000, no security will be required, however any Loans in excess of
this amount will require collateral to be posted. The SBCI has stated that an interest-only
option may be available for the initial period of the Loan. However, it is not clear under
what circumstances and for how long repayments may be deferred. For more information
on the Irish Liquidity Scheme, please see our recent article available here.
•
Future Growth Loan Scheme (“FGLS”) – the FGLS was originally established in June
2019 via the SBCI to support the development of SMEs and Agri businesses. In light of
the pandemic, the FGLS has recently received a boost of €200m in funding from the
Department of Business Enterprise and Innovation which will be released in traches to
provide long-term loans to businesses impacted by the pandemic. Loan amounts will range
from €100,000 to a maximum of €3m per applicant. In addition, loan terms will range from
eight to ten years and loans of up to €500,000 can be unsecured. Interest-only repayments
may be available at the start of the loan and interest rates will be capped at 4.5%.
•
The SBCI Credit Guarantee Scheme (the “CGS”) – the CGS was originally launched in
2012, however in response to the COVID-19 pandemic, the CGS was amended in April
2020 to assist SMEs whose businesses have been impacted by the virus. The CGS is
directed at commercially feasible SMEs which, under normal lending criteria, are unable
to obtain new or additional facilities from their bank due to insufficient collateral or
because they are impacted by COVID-19. In addition, the CGS is targeted at commercially
viable SMEs which due to their sectors, markets or business models are perceived as
a higher risk under current credit risk evaluation procedure. The CGS will be available
to COVID-19 impacted firms through the pillar banks and provides lenders with a State
guarantee, covering eligible credit facilities for 80% of the facility value, over a maximum
seven-year period. Essentially, the CGS is an additional form of security provided to
the lending bank by the Irish Government on behalf of the relevant borrower.
•
The COVID-19 Credit Guarantee Scheme (the “COVID-19 CGS”) – the Irish
government has repurposed an existing SME Credit Guarantee Scheme which
has been in place in various forms since 2012. Under the COVID-19 CGS the Irish
Government will guarantee up to €2 billion of loans provided by Irish banks to SMEs
whose businesses have been impacted by the pandemic. The COVID-19 CGS will
be available to certain SMEs established and operating in Ireland through the pillar
banks and will provide SMEs with a State guarantee (namely, the Irish Government
will guarantee the pillar banks against 80% of losses). Loans of €10,000 up to €1m
will be made available for terms of between three months and six years. It may also
be possible to avail of a three to six month interest only period. The COVID-19 CGS
is conditional on new legislation being passed which cannot be done until a new
government is formed following the recent general election in Ireland. Therefore, it is
expected that the COVID-19 CGS will not be available until June (at the earliest).
Government measures in key jurisdictions
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