Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar T.D. has announced a new COVID-19 Credit Guarantee Scheme (CGS) to make low cost loans available to businesses impacted by the pandemic.
The new scheme will provide much needed liquidity as the Irish economy continues to reopen and is the largest credit guarantee scheme for businesses in the history of the State.
It will ensure that SMEs, primary producers and small Mid-Caps can access liquidity to keep their businesses operating. It will be available for a wide range of products including overdrafts, term loans and working capital.
The current Credit Guarantee Scheme has a portfolio cap in place for individual finance providers which limits the State’s exposure to 13% of the loan facilities included in the scheme. The new Scheme sees a guarantee rate of 80% from the State with the lenders retaining 20% of the risk of the loan.
This Government decision removes any portfolio cap for credit facilities provided by each finance provider.
The Government has agreed to publish the Credit Guarantee (Amendment) Bill 2020, which will underpin the scheme and will also remove the portfolio cap, which will result in an increased potential maximum liability for the State of €1.6bn.
The legislation is expected to go through the Oireachtas next week, allowing for its swift enactment. As with other credit guarantee schemes, the COVID-19 CGS will be operated by the Strategic Banking Corporation of Ireland and will be available through three banks; AIB, Bank of Ireland and Ulster Bank. There will be an open call in due course.
Tánaiste Leo Varadkar T.D. said: “The changes being made to this Scheme will bring our offering into line with similar schemes across Europe. We want to give confidence to SMEs in particular, by providing the liquidity needed to get through the economic upheaval caused by the pandemic.”
