State scheme has lent SMEs €93m in six years

Credit guarantee scheme launched in 2012 supports in excess of 3,600 jobs

Credit guarantee scheme facilitates lending to SMEs which would otherwise by declined by lenders due to insufficient collateral. Photograph: iStock

Credit guarantee scheme facilitates lending to SMEs which would otherwise by declined by lenders due to insufficient collateral. Photograph: iStock

 

The State’s credit guarantee scheme (CGS) has delivered more than €93 million in loans to small and medium enterprises since its foundation in late 2012, The Irish Times has learned.

The scheme, provided through the Minister for Business, Enterprise and Innovation to the Strategic Banking Corporation of Ireland (SBCI) is designed to facilitate lending to SMEs which would otherwise by declined by lenders due to insufficient collateral.

The borrower contributed to the cost of the scheme by paying a premium of up to 2 per cent on the outstanding annual balance of the facility to the Minister for Business.

A new version of the CGS was launched by Minister of State Pat Breen earlier this year.

Level of risk

The new scheme, which follows amended legislation, increases the level of risk that the State will take to 80 per cent of individual loans. This makes it more attractive for lenders to advance loans to small- and medium-sized enterprises (SMEs).

The definition of loan agreements has also been extended under the scheme to include non-credit products such as invoice finance and leasing, and also to include overdrafts.

The scheme can facilitate loans of €10,000 up to €1 million for terms of up to seven years.

The latest report from the SBCI shows that in the second quarter of this year, 27 Irish SMEs obtained funding under the scheme amounting to €4.5 million.

Since its foundation in October 2012, some 587 facilities have been opened supporting over 3,600 jobs.

“I would encourage SME operators seeking to grow and develop their businesses to consider the benefits of the Credit Guarantee Scheme,” said Mr Breen.