The COVID-19 Credit Guarantee Scheme facilitates up to €2 billion in lending to eligible businesses that have been negatively impacted as a result of the outbreak of COVID-19 in Ireland.
The Scheme offers a partial Government guarantee (80%) to participating finance providers against losses on qualifying finance agreements to eligible SMEs, small Mid-Caps and primary producers.
It is designed to incentivise participating finance providers to continue to play their role in supporting the availability of additional liquidity to Irish businesses.
Loans under the Scheme range from €10,000 to €1 million, for terms of up to five-and-a-half years. Financing will be offered through a range of products, including term loans and working capital loans. Loans of up to €250,000 under the Scheme are available unsecured (except where this is a requirement of the product feature, as in the case of asset finance, invoice discount facilities, etc).
The Scheme is operated by the Strategic Banking Corporation of Ireland (SBCI) through participating finance providers.
Businesses eligible for the Scheme
This Scheme is available to eligible SME and small Mid-Cap businesses, including primary producers (businesses engaged in farming and fishing), established in Ireland.
Your business must also have experienced an adverse impact of minimum 15% in actual or projected turnover or profit due to the impact of COVID-19.
The definition of Small Mid-Caps can be found here: InnovFin SME Guarantee (PDF, 230KB)
The full details of the eligibility criteria are available through the SBCI website.
The COVID-19 Credit Guarantee Scheme is accessible by direct application to participating finance providers.
The Scheme is available through a range of financial providers which includes participating retail banks, participating credit unions and other participating non-bank lenders.
A full list of a participating finance providers is available through the SBCI website.
The COVID-19 Credit Guarantee Scheme operates under the State Aid Temporary Framework introduced in response to COVID-19. This is currently scheduled to remain in place until 30 June 2022.
Usage of loans
Loans under the Scheme provide much-needed liquidity to businesses that have been negatively impacted as a result of the outbreak of COVID-19. The Scheme may be used to underpin a range of different lending products depending on the finance provider.
However, loans under the Scheme must be used for:
- Working capital/Liquidity (examples include paying for stock, wages, other overheads)
- Investment (examples include re-fitting premises, buying new equipment)
In some circumstances, the Scheme will permit participating finance providers to refinance and rollover finance agreements. For example, under the Scheme an overdraft or short-term credit facility taken out as a result of impacts from the COVID-19 pandemic could be rolled into a term loan under the terms of the Scheme.
Any provision for potential refinance/rollover must be agreed with your finance provider as part of the initial finance agreement.
Interest rates on loans under the Scheme
The COVID-19 Working Capital Scheme offers an 80% state-backed guarantee for a range of different lending products through the participating finance providers.
Interest rates on these products will vary depending on individual characteristics such as the size of the loan, the tenor of the loan and the profile of each business. However, finance providers will offer a reduced interest rate compared to similar lending and this reduction will be stated on each loan agreement.
You may be able to avail of an optional interest and/or capital moratorium, but this will depend on the finance provider’s assessment of an application.
Loans under this Scheme are subject to the rules of the State Aid Temporary Framework introduced in response to COVID-19.
A participating enterprise (the borrower) will be required to pay a premium to comply with the terms of the European Commission’s State Aid Temporary Framework.
The premium will range from 0.15% - 0.68% for SMEs, depending on the term of the loan, and from 0.3% - 1.55% for small Mid-Caps depending on the term of the loan.
The premium will be collected by the finance provider as part of the repayment of the loan.
Limits on the amount that can be borrowed
The total amount of COVID-19 Credit Guarantee Scheme funding per participating enterprise shall not exceed:
- double the annual wage bill of the participating enterprise (including social charges as well as the cost of personnel working on the undertaking’s site but formally in the payroll of subcontractors) for 2019, or for the last year available. In the case of undertakings created on or after 1 January 2019, the maximum finance agreement must not exceed the estimated annual wage bill for the first two years in operation; or
- 25% of the participating enterprises’ total turnover in 2019.
Businesses engaged in the following activities are not eligible for the Scheme:
- Extraction of crude petroleum
- Extraction of natural gas
- Support activities for petroleum and natural gas activities
- Manufacture of tobacco products
- Manufacture of weapons and ammunition
- Manufacture of military fighting vehicles
- Construction of buildings
- Construction of residential and non-residential buildings
- Buying and selling of own real estate
- Gambling and betting activities
- Monetary intermediation.
In the event that a business has made a formal loan application to one of the participating finance providers and has been refused, the applicant must first make an appeal to the finance provider. If this internal appeal is unsuccessful, then an appeal may be made to the Credit Review Office, if the lender is a participating bank.
Full information on the appeal process is available from the Credit Review Office.
COVID-19 Credit Guarantee Scheme Performance Reports