AIB says over €60m in credit given under SBCI fund

The SBCI is hoping to kick-start lending to SME sector via cheap loans

AIB has approved more than €60 million in business credit to over 1,300 customers following the launch in March this year of a €200 million fund backed by the Strategic Banking Corporation of Ireland (SBCI).

The SBCI, which was launched in November, is intended to make it easier for small and medium-sized enterprises (SMEs) to avail of credit by offering loans that are up to 2 per cent cheaper than current market rates.

AIB said there had been strong demand from businesses and farmers for its loans, which are available at a rate of 4.5 per cent rate. The bank is matching the 1 per cent discount it receives from the SBCI with a further 1 per cent of its own.

The bank’s fund caters for loans up to €5 million, however many applications for funding are for less than €30,000 it said.


Commenting on demand for its fund, AIB's head of Business Banking, Ken Burke, said the bank was pleased with the level of uptake so far.

“It is very encouraging to see the range and scale of the 1,300 businesses that have been approved for funding. For example, they include a Dublin food company expanding its premises to support growth; a farmer in the midlands purchasing machinery; a pharmacy in the south-east purchasing a premises for its business; a hotel in the west renovating its property and purchasing equipment; and a dentist returning to Ireland to set up a new practice.”

“As the economy continues to recover, investment by SMEs in their businesses is critical for continued growth. This attractively priced fund has helped stimulate demand from our customers to invest in their businesses at this turning point in the economy, he added.

As part of the first phase of its programme, the SBCI, which is backed by German, European and Irish money, is channelling €400 million of funds into the sector through AIB and Bank of Ireland.

Under the initiative, the banks can offer loans at discounted rates for periods of between two and 10 years. A typical five-year €400,000 business loan can cost an SME borrower between €15,000 and €20,000 less than the current market cost over the lifetime of the loan.

The initial line of SBCI products also include a refinancing facility for firms whose current loans are with banks exiting the Irish market and a special investment loan product tailored specifically for SMEs in the agribusiness sector.

The SBCI has said the next tranche of funding will be spread further afield to other financial institutions in order to promote competition within the Irish banking sector.

The initial €800 million tranche of SBCI funding has been financed with a €150 million from Germany's state-owned KfW bank; a €150 million from the European Investment Bank and a further €500 million from the Ireland Strategic Investment Fund.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist