Government measures in key jurisdictions 4th edition - Flipbook - Page 58
Ireland
Adrian Benson | adrian.benson@dilloneustace.i.e. | +353 1 6731705
Contributor: Dillon Eustace
Loans and
financial
support
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 Covid19 pandemic. The range of measures introduced by the Irish Government include the follows.
•
The Strategic Banking Corporation of Ireland (“SBCI”) Covid19 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 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 €1.5 million 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 a three
month interest-only option may be available for the initial period of the Loan (depending on the
lender’s assessment of the relevant application). 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 businesses in the
agri sector. In light of the pandemic, the FGLS has recently received a boost of €500 million in
funding from the Department of Business Enterprise and Innovation which will be released
in tranches to provide long-term loans to businesses impacted by Covid-19. Loan amounts will
range from €25,000 to a maximum of €3
million per applicant. In addition, loan terms will range from eight to ten years and loans of up to €5
00,000 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 fa
cility 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 Covid19 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 Covid19 CGS will be available to certain SMEs established and operating in Ireland through AIB,
Bank of Ireland and Ulster Bank in the form of a
State guarantee to the relevant bank against 80% of losses. Loans of €10,000 up to €1
million 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 Covid19 CGS has now been brought into law through the enactment of The Credit Guarantee
(Amendment) Act 2020.
Has the
government put in
place any new
bank funding
schemes?
Government measures in key jurisdictions
58