The Strategic Banking Corporation of Ireland (SBCI) is the state’s strategic SME funding vehicle. Established in 2014, it provides SMEs with lower-cost loans for longer terms than can be accessed elsewhere. Funding is distributed through on-lenders, namely AIB, Bank of Ireland, Ulster Bank, Finance Ireland, First Citizen Finance, Bibby Financial Services Ireland and Fexco Asset Finance.

In 2017, the SBCI introduced its first risk-sharing products to the Irish SME funding market, says John Madigan, the bank’s Head of Marketing and Research. “This makes it easier for SMEs to borrow through successful measures such as the Agriculture Cashflow Loan Support scheme. The SBCI will also operate the new €300m Brexit Loan Scheme, which was announced in the Budget and will be available shortly.”

SBCI also manages the government’s Credit Guarantee scheme 2017, which supports viable SMEs that have been refused credit due to lack of collateral.

“By December 2017, the SBCI had supported 23,000 SMEs with €925m of SME funding,” Madigan adds. “Interest rates are, on average, 1.5% lower than market rates but the discount varies across lenders and loan types. Some 84% of loans are used by SMEs to invest in growing the business, 12% for working capital and 4% for refinancing loans owed to a lender exiting the Irish market.”

According to Madigan, the introduction of further risk-sharing products by the Corporation is a significant shift in the Irish SME funding market. “These products will enable the SBCI to help more businesses because SBCI risk-sharing means their bank is no longer taking all the risk on the loan.

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“This makes it easier for these businesses to meet their bank’s risk appetite and to borrow the funds they need to grow. For the SBCI, the success of the Agriculture Cashflow Loan Support scheme demonstrated that there are thousands of high-quality SMEs that can prosper if they get the right kind of support.”

The €300m Brexit Loan Scheme – the SBCI’s second risk-sharing initiative – is expected to be up and running by the end of Q1. Ministers have indicated that scheme loans will be provided through SBCI partners to eligible firms at an interest rate of 4% or less. The maximum loan will be €1.5m and the minimum will be €25,000. At least 40% of the fund will be available to food businesses.