Customers of banks and other lenders are to benefit from an extension of the present payment break for a further three months, if they are affected by fallout from the Covid-19 pandemic.

The Banking and Payments Federation Ireland, which includes the five main retail banks, together with non-bank lenders and specialist lenders and credit servicing firms, is to implement the extension forthwith.

Chief executive Brian Hayes (pictured) said: “BPFI has had excellent engagement with the Central Bank of Ireland on behalf it its members, and we appreciate the pragmatic approach being taken across the board to the challenges facing those affected by Covid-19.

“All relevant BPFI member firms will be contacting customers who have availed of payment breaks about the possibility of extending this break over the coming weeks and months.  Customers do not need to contact their lender - providers will contact customers."

BPFI chief economist Ali Ugur said that SMEs will require a range of state supports, the most significant of which should  be state guarantees for bank lending to business. “The estimated scale of the proposed new guarantee scheme could range from €6 to €8 billion, depending on the number of SMEs that would require it in the months ahead," he added.  

In Association with

The banks are calling for:

• 90% state guarantee for micro enterprises for loans up to €50,000
• 80% state guarantee for loans up to €5m for small and medium-sized enterprises
• There should be no portfolio cap applied
• Repayment term to apply up to 10 years
• Interest free for SMEs for 12 months
• General interest rates to be aligned with state guarantee provided
• Limits on restructuring of existing debt to be agreed
• Application process needs to be straightforward with an appropriately user-friendly application form. It should be clear that confirmation of eligibility of a borrower for the scheme by the fund does not imply credit approval which must be sought from one of the banking providers

"Current SME regulations issued in 2016 contain requirements on affordability assessment and we believe that these should be waived for the proposed new scheme during this crisis period,” Ugur stated. "Thousands of SMEs will require a cash injection to get back up and running again and to provide support during the initial six to nine months of trading until confidence is re-established and the economy returns to some form of normality.

 “At the heart of  SMEs’ survival and their capacity to withstand the economic hurricane that is Covid-19 is the central issue of liquidity. It is the most fundamental element in the survival plans for businesses and without liquidity support businesses will quite simply struggle, if not find it impossible, to survive.”