A €2bn loan scheme is to be made available for small businesses who have been impacted by Covid-19.
It is the largest credit guarantee scheme in the history of the State and will see low-cost loans made available to keep small businesses trading as they recover from the impact of the pandemic.
The new Covid-19 credit guarantee scheme (CGS) will make low-cost loans available to businesses impacted by the pandemic.
Leo Varadkar, the Tánaiste and Minister for Enterprise, Trade and Employment, said the scheme will provide much-needed liquidity as the economy reopens.
The scheme will ensure that SMEs, primary producers, and small mid-caps (defined as fewer than 499 employees) can access liquidity to keep their businesses operating.
The legislation is expected to go through the Oireachtas next week, allowing for its swift enactment. As with other credit guarantee schemes, the Covid-19 CGS will be operated by the Strategic Banking Corporation of Ireland and will be available through three banks: AIB, Bank of Ireland, and Ulster Bank.
Mr Varadkar said the scheme is designed to "help viable businesses get through the difficult phase of reopening and deal with the new realities and challenges posed by Covid-19".
The changes made with the Credit Guarantee (Amendment) Bill 2020 will bring Ireland "largely in line with similar schemes across Europe", said Mr Varadkar.
"We want to give confidence to SMEs in particular, by providing the liquidity needed to get through the economic upheaval caused by the pandemic. This scheme complements the other actions taken to date by Government, including direct grants to businesses, the warehousing of tax liabilities and commercial rates waivers. The July Stimulus Package will be the next step in our recovery plan as we seek to get businesses back on their feet and our people back to work," he said.
In order to qualify for the scheme, businesses will have to have seen turnover or projected turnover decrease by a minimum of 15% due to the virus.
Loans will be available from €10,000 to €1m.
The credit scheme has already come in for criticism, though, as the State will only guarantee 80% of the loan. Neil McDonnell, head of business group Isme, toldlast week he was “baffled and astounded” by the signals that the 100%-guaranteed loans would not be part of the July stimulus package for small firms. The UK's 100%-guarantee scheme in which AIB and Bank of Ireland both participate has been hugely successful.