New guarantee scheme for SMEs
The Credit Guarantee Scheme will go live next week, and is expected to provide an additional €150 million in lending for small businesses per year, Minister for Jobs, Enterprise and Innovation Richard Bruton said today.
The scheme which goes live next Wednesday, will be open to companies employing fewer than 250 staff and with an annual turnover of less than €50 million. It will offer loans of up to €1 million.
“The Credit Guarantee Scheme will benefit innovative, job-creating businesses that face obstacles accessing credit because they do not have enough collateral, or because they operate in sectors which the banks are not familiar with. These are the businesses we need to stimulate our jobs recovery,” Mr Bruton said.
The scheme is expected to benefit 5,600 businesses and support the creation of 4,000 jobs over three years.
Under the scheme, a 75 per cent State guarantee is to be provided to banks against losses on qualifying loans to firms with growth and job creation potential who currently have difficulty getting finance from the banks.
Initially the scheme will facilitate up to €150 million of additional lending per annum to SMEs for three years. The scheme will be demand-led, and take-up and performance will be closely monitored, the department said.
The recent EU Commission Overview of Competitiveness across 27 member states shows that lending to small and medium enterprises is Ireland’s weakest area, Labour Party TD Kevin Humphreys said.
“SME access to bank lending is critical to enterprise, innovation, and job creation and we are currently the second poorest performer on this measure in the EU, above only Greece,” he added.
The Credit Guarantee Bill, which underpins the scheme, passed through all stages in the Oireachtas before the summer recess. The scheme will be operated by Capita Services.