Credit Guarantee Bank Loans Now Available

/ 7th September 2020 /

Bank loans underpinned by the government’s Credit Guarantee Scheme are now available to business borrowers from Bank of Ireland, Ulster Bank and AIB.

The initiative is the biggest ever state-backed loan guarantee launched in Ireland, with the government providing an 80% guarantee to participating banks to provide loans to eligible SMEs for up to six years.

The CGS will be managed by the SBCI, with funding available through AIB, Bank of Ireland and Ulster Bank. Financial products expected to be on offer through the CGS include overdrafts, term loans and working capital, although the focus is initially on term loans.

A key criterion for businesses accessing the finance is an adverse impact of at least 15% of (actual or projected) turnover or profit due to Covid-19. The CGS will be initially available until the end of 2020.

A guarantee premium on each CGS loan is levied in addition to interest rate costs. For SMEs it is 0.25% in the first year, 0.50% in years two and three and 1.0% in years four, five and six.

Enterprise minister Leo Varadkar (pictured) commented: “We have seen our small and medium enterprises work hard to adapt and to continue trading in the face of this profound disruption. The government is determined to help businesses as they operate in a fundamentally changed trading environment.”

Nick Ashmore, CEO of the Strategic Banking Corporation of Ireland, said the expansion of the scheme to include primary producers and the provision of unsecured loans of up to €250,000 has significantly expanded the scope and impact of the scheme.

Bank of Ireland has created an online portal to simplify the CGS application process and will start accepting applications from Thursday September 10. Michael Lauhoff, director of business banking, said the interest rate on its CGS loans up to €250,000 will be 3.23% variable.

AIB has created an SBCI hub for SMEs to find out more about the Credit Guarantee Scheme. The bank said that it will offer loans through the CGS on a first come, first served basis to eligible businesses.