Worry over Brexit fund

Worry over Brexit fund

By Pádraig Hoare

Business groups have largely welcomed the Government’s €300m Brexit loan fund but have cautioned the available funds may dry up quickly.

The scheme, which was announced in the budget, is open to businesses with up to 499 employees with loans ranging from €25,000 to €1.5m at a rate of 4% or less.

Loans of up to €500,000 will be unsecured and the term will be up to three years.

Firms will apply to the Strategic Banking Corporation of Ireland, which will assess their loan application and gauge whether they are eligible. The corporation will deliver the funds through commercial banks.

Small Firms Association (SFA) director Sven Spollen-Behrens said the fund was welcome but would have to be monitored carefully.

“Close monitoring will be required to ensure the scheme’s impact on small businesses is maximised. With loans of up to €1.5m available and companies with up to 499 employees eligible to apply, the €300m could dry up very quickly,” he said. He said an expansion of the scheme would be needed if the funds ran out.

“Obviously we are hoping to have a large number of smaller businesses looking for small loan amounts rather than larger companies looking for the max amount. We’ll have to see what the take-up is now and if funds dry up quickly, we need to talk to the Government again and look for an expansion of the scheme.”

Mr Spollen-Behrens said he was not concerned that abuse of the loan scheme would take place.

“There will be a pre-screening by the Strategic Banking Corporation of Ireland, and you can only qualify if you can demonstrate that you are affected by Brexit and use the loan for working capital to expand your business,” he said.

Isme chief executive Neil McDonnell echoed the SFA’s welcome, saying unsecured loans of up to €500,000 and interest rates of up to 4% made the scheme attractive for businesses.

“A 4% is better than the rate a lot of our members are paying. It is not uncommon for some to pay 10% at the riskier end. The €500,000 unsecured loan is probably the most welcome element,” he said.

A Department of Finance report has found Ireland is a “substantial outlier” in the EU for import exposure to the UK in almost every sector. Food and live animals account for the largest share of UK imports, it said.

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