Bank of Ireland is the first on-lender to be announced for the Ukraine Credit Guarantee Scheme.
Ministers said a number of other lenders are expected to take part in the scheme following the Open Call for participants which closed last Friday.
The scheme has a lending ceiling of €1.2 billion and will facilitate loans for working capital and medium-term investment.
The main features are:
• no personal guarantee or collateral required for loans up to €250,000
In Association with
• loans of up to 6 years and €1 million
• reduced interest rates vs standard market rates
• available until 31 December 2024 and includes famers, fishers and small mid-caps
• Open Call has encouraged variety of lenders to participate, including non-banks and credit unions
• Pre-eligibility available on SBCI Hub.
Enterprise minister Simon Coveney said many businesses need access to liquidity and this Credit Guarantee Scheme gives that.
“Low cost loans, favourable terms and pre-eligibility availability makes this scheme attractive and accessible to businesses including SMEs, farmers and fishers,” the minister stated.
“In the coming time I look forward to a number of other lenders and financial institutions participating in the scheme. The government will continue to assist businesses in the most practical, targeted and effective way as we continue to negotiate a challenging trading environment.”
Finance minister Michael McGrath explained: “The scheme will allow businesses which have experienced an increase in costs of over 10% on 2020 due to the impact of the conflict to access lending terms of up to 6 years, on loans ranging from €10,000 to €1 million, with amounts of up to €250,000 available on an unsecured basis.
“I welcome Bank of Ireland’s participation in this scheme as on-lender under the SBCI’s on-lending partnership arrangements for risk-sharing schemes.”
June Butler, CEO of the Strategic Banking Corporation of Ireland (SBCI), commented: “We believe that businesses, including farmers and fishers, will benefit from having access to this additional financial support, to fund their working capital and investment needs.
"The provision of unsecured loans of up to €250,000, together with the reduction in applicable interest rates, makes the scheme a viable option for borrowers.”
Ukraine Credit Guarantee Scheme
• This is a scheme for SMEs, primary producers and small mid-caps (defined as businesses with up to 499 employees).
• In order to qualify for the scheme, the borrower will have to declare that costs have increased by a minimum of 10% on their 2020 figures and that the loan is being sought specifically as a result of difficulties being experienced due to the Ukraine crisis.
• Loans will be available to viable businesses only and it must be a new loan with no refinancing.
• The ceiling of funding available under the UCGS is €1.2 billion.
• A guarantee rate of 80% for the state with the lenders retaining 20% of the risk of the loan.
• The current standard facility size of €10k to €1 million under the current Acts will remain for the UCGS.
• The products covered under the Scheme will include a broad range of credit facilities including overdrafts, working capital and term loan facilities.
• Capital and/or interest moratoria for specific periods of time (up to three months) will be permitted under the scheme, but any decision regarding such moratoria will be at the discretion of the individual lender based on their assessment of their customer.
• The new scheme has been prepared in order to comply with the terms of the European Commission’s Temporary Crisis Framework for State Aid. In particular:
o Primary agricultural, fisheries and aquaculture producers may be included.
o A guarantee premium on each loan under the Scheme is required to be paid in addition to interest rate costs. The premia range for SMEs is 0.29% for loans of 1-3 years and 0.68% for 4-6 years. For small mid-caps the range is 0.73% for 1-3 years and 1.55% for 4-6 years.
• The scheme will be timebound and will be available until 31 December 2024.
• Businesses will first seek eligibility through the new SBCI Hub. If successful, the applicant will receive a code which can be used at any participating finance provider.
The Credit Guarantee (Amendment) Bill 2022 was signed into law by the President on 2 December 2022.
