SMEs draw down nearly €45m in funding from SBCI

Over 1,600 firms have availed of loans from State-backed fund

More than 1,600 Small and medium-sized businesses have availed of loans from the State-backed Strategic Banking Corporation of Ireland (SBCI) in its first four months with the majority of funding used for investment purposes.

New figures show that €44.7 million in total funding has been drawn from the SBCI, which was set up to offer loans to companies which are up to 2 per cent cheaper than current market rates.

Of the funds advanced during the period March to June, €39.1 million was for investment purposes, while €1.7 million was for refinancing of existing bank loans and €3.9 million for working capital.

The agriculture sector accounted for nearly a third of all loans drawn in the four month period. Other industries were well represented however, with admin and support service-related firms (16 per cent of loans), accommodation and food service (13 per cent), the wholesale and retail trade (12 per cent) and manufacturing (7 per cent) among other sectors to avail of the initiative.


There was also a broad geographical spread with the highest number of loans being taken in the south west, Dublin and the west.

Minister for Finance Michael Noonan welcomed publication of the figures saying the SBCI had made substantial headway in deploying funds.

“When I was introducing the legislation establishing the SBCI last year, I predicted that people will look back on this in 20 years’ time and see it as a landmark decision that radically changed the way we do business in Ireland. Seeing the progress made by the SBCI and looking at its plans for the future, I am certain that this will be the case,” he said.

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.

"It is early days but momentum is gathering and the SBCI team has been working hard to create awareness of these loans amongst the Irish SME community to support the growing appetite for business investment," said SBCI chief executive Nick Ashmore.

“This finance is appealing to SMEs who want to have the flexibility and cost efficiency which our loans provide. The fact that 90 per cent of the loans are for investment purposes and the average loan size is €27,500 indicates renewed confidence amongst smaller SMEs and a real sense of renewal across the business community who have suffered through some leaner years,” he added.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist