The impact of COVID-19 on businesses is unprecedented. Our dedicated Debt Advisory Team have live up-to-date market knowledge and are here to support you.
In response to COVID-19 the Irish government announced or repurposed several debt funding measures to support Irish businesses disrupted by the pandemic.
On Saturday May 2nd 2020 the Government announced a further package of funding supports available to impacted Micro, Small, Medium and Large Corporates.
On Thursday July 23rd 2020 the Government announced the July Jobs Stimulus Package which included changes to existing credit supports and additional credit supports.
The most up-to-date information on the credit supports can be found here.
The Ireland Strategic Investment Fund (ISIF) is revising its investment strategy to establish a sub-portfolio within ISIF called the Pandemic Stabilisation and Recovery Fund. This sub-portfolio will invest up to €2 billion of ISIF’s readily available capital in medium and large enterprises.
The €2 billion COVID-19 Credit Guarantee Scheme will provide an 80% guarantee on lending to SMEs until the end of this year, for terms between 3 months and 6 years with interest free periods of up to 1 year available. SMEs will be able to go directly to the banks in the Scheme, and the guarantee can be used for a wide range of lending products between €10,000 and €1 million. It will be available to all SME sectors, including primary producers. There will be an agreed maximum interest rate at or below market rates. The funds can be used to refinance existing debt which is a key differentiator and precluded under the other supports available.
The credit guarantee scheme is a further development of the existing SBCI Credit Guarantee Scheme. The Lenders will not be subject to a portfolio cap as originally expected. The publication of the legislation with all requisite detail is imminent.
This is a €550m fund (increased from €250 million in July) targeted at small and micro enterprises that have been impacted by COVID-19.
Details of the scheme will be worked on by the Department of Public Expenditure and Reform in consultation with the Departments of Business, Enterprise and Innovation and Housing, Planning and Local Government.
It was intended that companies would receive a total amount equivalent to no more than their 2019 rates bill and that there will be a cap per business of €10,000. The July stimulus has increased this cap to €25,000. Further payments may be available to firms which have already received them. The pool of eligible businesses has also been widened to include previously excluded sectors such as B&Bs and charities.
The SBCI Future Growth Loan Scheme has been in existence since July 2019 and is offered with the support of the Department of Business, Enterprise and Innovation, the Department of Agriculture, Food and the Marine, the European Investment Bank and the European Investment Fund (EIF).
The July Jobs Stimulus package provides for an expansion of the SBCI Future Growth Loan Scheme by an additional €300m to €500m.
An SME is defined by the Standard EU definition [Commission Regulation 2003/361/EC] as an enterprise that:
An SME or small mid-cap that:
The SBCI COVID-19 Working Capital Scheme is offered in partnership with the Department of Business Enterprise and Innovation, the Department of Agriculture Food and the Marine and is supported by the InnovFin SME Guarantee Facility, with the financial backing of the European Union under Horizon 2020 Financial Instruments.
The loans will be available through AIB, Bank of Ireland and Ulster Bank. Approval of loans are subject to the banks own credit policies and procedures. It should be noted that businesses cannot complete a loan application until they have received their eligibility letter from the SBCI.
To qualify for eligibility to the scheme, each borrower’s business’s turnover or profitability must be negatively impacted by a minimum of 15% directly due to COVID-19. In addition, borrower’s businesses must meet one of 11 possible innovation criterions.
The details of the innovation criteria can be found at https://sbci.gov.ie/products/covid-19-working-capital-loan-scheme.
SMEs are defined by the Standard EU definition [Commission Regulation 2003/361/EC] as enterprises that:
A Small Mid-Cap is an enterprise that is not an SME but has fewer than 500 employees
SMEs/ Small Mid-Caps that:
The COVID-19 Business Loan from Microfinance Ireland is a government initiative to support microenterprises, through the current period of uncertainty, who are or may impacted by the coronavirus in Ireland.
The July Jobs Stimulus Package saw additional liquidity and enterprise investment measures announced worth €55 million to support small and micro companies through additional resources for MicroFinance Ireland and the Local Enterprise Offices.
Any microenterprise (Sole Trader, Partnership or Limited Company) who is currently trading and is;
Microenterprises are businesses with;
In order to apply for finance up to €50,000, the business must provide a declaration to Microfinance Ireland that they meet the above eligibility criteria.
The Credit Guarantee Scheme was in place before COVID-19 but has been repurposed by SBCI to help SMEs access sufficient working capital.
The Scheme aims to assist viable SMEs, which under normal lending criteria are unable to borrow from their bank, in accessing credit. The scheme operates by providing an 80% guarantee to participating finance providers (currently AIB, Bank of Ireland and Ulster Bank) on qualifying loans to SMEs.
The scheme had been designed to address three barriers to lending:
The Credit Guarantee Scheme can now also be used by businesses to obtain loans to support changes they need to make to their business in response to COVID-19.
SMEs may be eligible if they:
Exclusions to eligible SMEs include;
The interest rate charged on the loan will be the bank’s market SME lending rates. In addition, the borrower pays a premium which partially covers the cost of providing the guarantee. The premium can vary but is currently 0.5%. The premium is collected annually or quarterly throughout the life of the guarantee (max. 7 years).
Businesses seeking to avail of the guarantee scheme can approach a participating lender. Participating lenders will make all decisions on lending. Currently, Ulster Bank, Bank of Ireland and AIB are participating in the Scheme.
In response to COVID-19 Enterprise Ireland has created a new €180 million, fund to provide manufacturing and internationally traded services companies with capital to help stabilise and rebuild their businesses.
The fund is open to eligible companies which;
The following are ineligible companies for the scheme;
In order to apply for the Sustaining Enterprise Fund, eligible companies will need to provide:
The Business Sustainment Plan must identify the extent of the immediate liquidity needs and outline how support provided through the proposed measures will remedy the company’s immediate problems.
Applications should be made through Companies existing Development Advisers or through the COVID-19 Business Response Unit at email@example.com
If you have any related questions or need further information about KPMG’s response to COVID-19, please get in touch with our Debt Advisory team for assistance.