More than 1,300 owners of small businesses have been allocated a combined €60m in funding from the Strategic Banking Corporation of Ireland approved by AIB since its launch in March.
Strong demand for the discounted credit has seen almost a third of AIB’s €200m fund distributed in just over two months.
In total, €800m worth of credit is to be made available to SMEs at discounted rates.
The initiative is funded through the European Investment Bank; the Ireland Strategic Investment Fund, and German promotional bank KfW.
AIB — one of the two pillar banks along with Bank of Ireland through which the funds are initially being made available — is offering SBCI funds at a flat rate of 4.5%. The cheaper loans represent a 2% discount on its standard variable business loan rate.
AIB head of business banking, Ken Burke, said demand since SBCI’s launch has been encouraging and is helping firms grow at a significant juncture as the economy continues to pick up.
“As the economy continues to recover, investment by SMEs in their business is critical for continued growth,” Mr Burke said.
“This attractively priced fund has helped stimulate demand from our customers to invest in their businesses at this turning point in the economy.”
The fund offers loans of up to €5m with terms ranging from two to 10 years.
Demand to date has come from businesses across the country and from a range of sectors, according to AIB. The bank also has a 48-hour decision-making process for loan applications up to €30,000.
Three initial products have been made available under SBCI, including an SME investment and working capital loan, and a similar agriculture loan.
A refinancing option for SMEs whose loans originated with banks which are exiting the Irish market is also available.
The scheme, which offers business owners more affordable financing options closer to the cost of borrowing elsewhere in Europe, came about in response to concern that the restricted lending environment over the past number of years had hampered business growth.
SMEs in particular have felt the pinch with the Irish Small and Medium Enterprise Association among the groups voicing concern over availability of credit.
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