Following the publication of the government’s Roadmap for Reopening Society and Business, which sets out a five-stage plan to ease the COVID-19 restrictions and reopen Ireland’s economy and society, Minister for Finance, Public Expenditure and Reform Paschal Donohoe outlined a suite of new support measures to help businesses in the "gradual recovery phase".
These additional measures build on what has already been done to help businesses and are to aid the economy as the COVID-19 restrictions start to be lifted.
The €2bn COVID-19 Credit Guarantee Scheme is a further development of the existing Credit Guarantee Scheme, which is already available from AIB, BOI and Ulster Bank, aimed at supporting lending to SMEs.
It will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years, at interest rates below current market rates.
SMEs will be able to go directly to the banks in the scheme, and the guarantee can be used for a wide range of lending products between €10k and €1m that have a maximum term of six years or less. It will be available to all SME sectors, including primary producers.
It will be possible for other lenders – other than AIB, BOI and Ulster Bank – to get access to the scheme. Lenders will be subject to a portfolio cap of 50%. This reduces the contingent exposure to the Exchequer, meaning that the size of the scheme can be larger.
Implementing this scheme will require legislation, the drafting of which has been approved by government.