Govt publishes Credit Guarantee Bill

The Government has announced a new scheme that will facilitate up to €150m of additional lending per year to small businesses.

The Credit Guarantee Bill will provide a 75% State guarantee to banks against any losses on loans to firms that qualify.

"It is intended to address market failure affecting commercially viable businesses in two specific situations – namely, where businesses have insufficient collateral, and where businesses operate in sectors with which the banks are not familiar," a statement said.

The SMEs must show growth and job creation potential.

For every €150m of additional lending, the scheme is expected to benefit over 1,800 businesses, according to the Department of Jobs, Enterprise and Innovation.

The Bill will now be introduced to the Oireachtas, and it is expected that it will be enacted shortly.

Jobs Minister Richard Bruton said the scheme will be reviewed after one year.

“This Government is determined to improve the conditions for businesses with practical measures that can help them to establish, expand, and create jobs," Minister Bruton said.

"Access to credit remains a key issue for many businesses, and although we as a Government have moved decisively to restructure the banking system and ensure that it provides credit into the economy every year, we must also act to fill gaps where specific market failures exist.

“The Credit Guarantee Scheme will benefit innovative, job-creating businesses that face obstacles accessing credit because they do not have enough collateral, or because they operate in sectors which the banks are not familiar with," he added.

"These are the businesses we need to stimulate our jobs recovery, and this Government is determined to make that process easier where we can."

Minister Bruton also announced that he has awarded a contract for the practical oversight, management and operation of the scheme to Maynooth-based company Capita Asset Services following a competitive tendering process.

The Bill was welcomed by the Small Firms Association (SFA), which said that such schemes have been in existence in our competitor countries for some time.

"Access to credit is vital for small business survival and expansion," said SFA Chairman Ian Martin.

"The credit guarantee scheme should move the risk pendulum of banks to say ‘yes’ to more small businesses and that is most welcome.”

However Mr Martin called on the Government to commit that it will meet the demand in full for guarantee funding from small businesses, and to remove the €150m ceiling cap from the Bill.