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€2 billion COVID-19 Credit Guarantee Scheme will provide low cost loans to businesses impacted by COVID-19 - Tánaiste

Largest credit guarantee scheme in history of the State

The new COVID-19 Credit Guarantee Scheme (CGS) will make low cost loans available to businesses impacted by the pandemic, providing much needed liquidity as our economy continues to reopen, according to the Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar. The Government has agreed to publish the Credit Guarantee (Amendment) Bill 2020, which will underpin the scheme and will also remove the portfolio cap, which will result in an increased potential maximum liability for the State of €1.6 billion. 

This Scheme will be the largest credit guarantee scheme for businesses in the history of the State. It will ensure that SMEs, primary producers and small Mid-Caps can access liquidity to keep their businesses operating, as our economy continues to reopen and more and more people get back to work. It will be available for a wide range of products including overdrafts, term loans and working capital. 

The legislation is expected to go through the Oireachtas next week, allowing for its swift enactment.  As with other credit guarantee schemes, the COVID-19 CGS will be operated by the Strategic Banking Corporation of Ireland and will be available through three banks; AIB, Bank of Ireland and Ulster Bank. There will be an Open Call in due course.

The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar T.D. stated “We want to help viable businesses to get through the difficult phase of reopening and deal with the new realities and challenges posed by COVID-19. The Credit Guarantee Scheme will provide low cost loans to businesses and will in turn help more people to get back to work.

“The changes being made to this Scheme will bring our offering into line with similar schemes across Europe. We want to give confidence to SMEs in particular, by providing the liquidity needed to get through the economic upheaval caused by the pandemic. This Scheme complements the other actions taken to date by Government, including direct grants to businesses, the warehousing of tax liabilities and commercial rates waivers. The July Stimulus Package will be the next step in our recovery plan as we seek to get businesses back on their feet and our people back to work.”

Legislative changes are needed to the existing Credit Guarantee Act 2012 (as amended) to put in place the extra measures for the COVID-19 Credit Guarantee Scheme.  These changes allow the removal of the portfolio cap and also increase the size of the scheme to take account of the needs of business to respond to the economic challenges brought on by the COVID-19 pandemic. 

The current Credit Guarantee Scheme has a portfolio cap in place for individual finance providers which limits the State’s exposure to 13% of the loan facilities included in the scheme. The Government decision removes any portfolio cap for credit facilities provided by each finance provider. The risk share of 80% for the State and 20% for the finance provider remains in place. Removal of the portfolio cap is essential in order to ensure lenders provide much needed liquidity to businesses and signals the strength of the Government’s policy response to the unprecedented health pandemic and economic crisis. Restoring liquidity to borrowers will be a critical feature of economic recovery.




Notes to Editor

Features of the COVID-19 Credit Guarantee Scheme

  • This is a scheme for SMEs, Primary Producers and small Mid-Caps (defined as businesses with up to 499 employees). SMEs are expected to be the main beneficiaries.
  • In order to qualify for the Scheme, the borrower will have to declare an adverse impact of minimum 15% of actual or projected turnover or profit due to the impact of COVID-19.
  • The amount available under the COVID-19 CGS is €2 billion.
  • A guarantee rate of 80% for the State with the lenders retaining 20% of the risk of the loan.
  • The removal of any portfolio cap for individual lenders.  A portfolio cap has been a feature of previous CGS.  However, the removal of the cap for the COVID-19 CGS is essential in order to ensure lenders provide an interest rate reduction to borrowers and also comply with the Capital Requirements Regulation. 
  • The current standard facility size of €10k to €1 million under the current Acts will remain for the COVID-19 CGS.
  • 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 one year) 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 State Aid Framework.  In particular:
    • Primary agricultural, fisheries and aquaculture producers may be included.
    • A guarantee premium on each loan under the Scheme is required to be paid 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% in years four, five and six).
    • The scheme will be timebound and will be available initially until 31 December 2020.
    • The rollover of loans will be facilitated but no loan included in the Scheme can extend beyond 31 December 2026.  

Contact Details for the Department

The Department of Business, Enterprise and Innovation (DBEI) plays a key role in implementing the Government’s policies of stimulating the productive capacity of the economy and creating an environment which supports job creation and maintenance. The Department has lead responsibility for Irish policy on global trade and inward investment and a remit to promote fair competition in the marketplace, protect consumers and safeguard workers.

For further information, members of the media can contact Press Office, D/Business, Enterprise and Innovation, or (01) 631 2200.

A comprehensive listing of supports, grants, and advice available to businesses affected by COVID-19 is available at

Contact the Business Support Call Centre

The Department of Business, Enterprise and Innovation has established a Business Support Call Centre for information on the business supports available to businesses and enterprises affected by COVID-19. It can be reached at or (01) 631 2002.