SMEs take up just €45m of SBCI loans

Just over 10% of the Government’s €400m SME financing fund was taken up in the first four months, according to latest figures.

The Strategic Banking Corporation of Ireland (SBCI) was established in September 2014 and began lending to SMEs at a discounted rate at the beginning of March.

The fund was lauded as a key part of the Government’s strategy to make cheaper finance readily available to small and medium-sized businesses and alleviate the financing difficulties they were facing.

An initial €400m was made available through Bank of Ireland and AIB with more lenders expected to come on stream with the scheme in the coming months.

Latest figures to the end of June show that €45m worth of SBCI loans, or 11.2%, was taken out by Irish businesses in the opening four months of the scheme.

More than 1,600 businesses availed of the financing offer in that time with 90% of the loans intended for investment purposes.

The average loan size was €27,500. The figures were released by Finance Minister Michael Noonan in response to Fianna Fáil finance spokesman Michael McGrath.

“The Government’s aim for the SBCI is to enhance the range and profile of SME finance providers in Ireland, and thereby increase competition for SME lending,” said Mr Noonan.

“The SBCI will achieve this by working with existing and new providers to develop specific funding products and by supporting new entrants to the SME lending market through allocating the remaining €400m to a number of new and non-traditional SME finance providers for onward disbursement to the SME sector.”

The agriculture sector accounted for nearly a third of all loans while 85% of loans were granted to regionally based companies.

The minister also advised that a further update on the SBCI’s lending activities is due in January.

Meanwhile, another Government-backed fund aimed at supporting small businesses has rejected close to 40% of applications it has received.

Microfinance Ireland has rejected 449 applications to the Microenterprise Loan Fund which provides loans of up to €25,000 to companies employing fewer than 10 people.

This represents a rejection rate of 39.6% with 683 applications approved since its establishment in late 2012. The number of applications doesn’t include 234 that were withdrawn.

Close to €9m has been drawn down from the fund as of the end of last month.

A key criteria companies had to meet was the requirement that an application for finance from a bank had been previously rejected.

The scheme underwent a major overhaul last month however, to remove the onerous restriction amid widespread criticism of the requirement.

“The requirement for microenterprises to obtain a bank refusal before seeking finance from Microfinance Ireland has proven to be an unnecessary obstacle,” Business and Employment Minister Ged Nash said.

Microfinance Ireland charges a 5% interest rate on its Irish Best Young Entrepreneurs product which rises to 7.8% for applicants coming to the service via a local enterprise office while 8.8% interest is charged for applicants applying directly.


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