The Department of Agriculture has issued further details of the Future Growth Loan Scheme, and said announcements will be made shortly, and that it will be launched as soon as possible.
It will be delivered through participating finance providers, and will make up to €300 million of long-term investment loans available to eligible Irish businesses, including farmers, and the agri-food and seafood sectors.
The scheme will run for three years from its launch date, offering competitively-priced loans for terms of 8-10 years, to support strategic long-term investment in a post-Brexit environment.
There will be a minimum loan amount of €100,000 for small and medium-sized enterprises (SMEs), or €50,000 for primary agriculture. The maximum loan amount will be €3m, and loans of under €500,000 will be made on an unsecured basis.
There will be €50-60m available initially for farmers, within an overall agri-food package of €120m.
Should demand exceed these levels, this can be reviewed.
The Future Growth Loan scheme has been developed by the Government in partnership with the Strategic Banking Corporation of Ireland (SBCI), and the European Investment Fund (EIF). SBCI recently issued an open call inviting banks and other lenders to become lending partners. This closed on February 11.
A period of due diligence followed. Agriculture Minister Michael Creed said the scheme “is a long-awaited source of finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their banking institution.”
What kind of businesses will be eligible for the scheme?
The scheme will be available to SMEs and the primary agriculture and seafood sectors. Eligible businesses must have an establishment or branch in Ireland.
How will businesses apply for the scheme?
The Future Growth Loan Scheme features a two-stage application process. First, applications for eligibility under the scheme will be made through the SBCI website. The SBCI will assess the applications, and those successful will be issued an eligibility reference number.
Secondly, applications for a loan under the scheme will be made to one of the participating finance providers, using the eligibility reference number.
What are the expected loan terms under the scheme?
Loans are for terms of 8-10 years. The minimum loan amount is €100,000 for SMEs, or €50,000 for primary agriculture. The maximum loan amount is €3m. Loans of under €500,000 are to be made on an unsecured basis. Approval of loans is subject to the finance providers’ own credit policies and procedures.
What can the loans be used for?
Loans must be used for investment in tangible or intangible assets for the purpose of process and organisational innovation, or investment in tangible and intangible assets on agricultural holdings linked to primary agricultural production.
Will it be possible for loans granted under the scheme to be used to refinance existing loans?
No, loans granted under this scheme cannot be used to refinance existing loans.
Will businesses have to be clients of state agencies such as Enterprise Ireland, the Local Enterprise Offices, or Bord Bia?
No, the scheme is open to all eligible businesses, whether a state agency client or not.
Will applicants be required to present a business plan as part of the application process?
Applications for loans under €200,000 will not require businesses to present a separate business plan, once the loan application conforms to the guidance issued by the Consultative Committee of Accountancy Bodies Ireland and the Irish Banking Federation.
For loans in excess of €200,000, a business plan must be completed as part of the application process. A template business plan will be provided.
Who are the participating finance providers?
Details of the participating finance providers will be provided at a later stage.
What is the State Aid basis for the scheme?
For SMEs and the seafood sector, the Future Growth Loan Scheme will be administered under Article 29 of the General Block Exemption Regulation (GBER) state aid rules. For businesses involved in primary agriculture, the scheme will be administered under the Agricultural Block Exemption Regulation.
Will any sectors not be eligible for the scheme?
The normal European Investment Fund Guidelines on restricted sectors apply. These restrictions prohibit EIF from operations in certain economic sectors which are considered not to be compatible with the ethical or social basis of the public mission of the European Investment Fund.
What can I do if my loan application is refused by a finance provider after passing the initial eligibility?
In the event that a business has made a formal loan application to one of the participating lenders and has been refused, the applicant must first make an appeal to the lender. If this internal appeal is unsuccessful, then an appeal may be made to the Credit Review Office, if the lender is a participating bank.