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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.

  1. Pandemic Stabilisation and Recovery Fund
  2. Credit Guarantee Scheme
  3. Restart Fund
  4. SBCI Future Growth Loan Scheme
  5. SBCI COVID-19 Working Capital Scheme
  6. Microfinance Ireland COVID-19 Business Loan
  7. SBCI Credit Guarantee Scheme
  8. Enterprise Ireland – Sustaining Enterprise Fund

1. Pandemic Stabilisation and Recovery Fund

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.

Eligibility

  • Clearly and materially impacted by COVID-19;
  • Have 250 employees or more;
  • Have a turnover of €50 million or more;
  • ISIF may consider investing in enterprises below these levels if they are assessed to be of substantial scale and of significant importance at national or regional level;
  • Can demonstrate the business was commercially viable prior to the COVID-19 pandemic, and that they can return to viability and contribute to the Irish economy; and
  • All sectors will be considered subject to ISIF's Responsible Investment Policies. The business does not currently need to align with ISIF's existing Priority Themes of Regional Development, Housing, Indigenous Businesses, Climate Change, Brexit.

Capital features

  • Capacity for long term time horizon;
  • Flexibility across types of investment, capital structure, instrument, risk levels etc;
  • Patient capital, non-controlling / minority investor; and
  • Ability to work with co-investors

Co-investment

  • Where existing shareholders have capital available, they will be expected to meaningfully participate alongside ISIF in any recapitalisation. 

Double bottom line

  • Commercial return and economic impact remain core to the ISIF mandate;
  • ISIF will only invest on a commercial basis, in enterprises that present viable business models in the medium to long term;
  • ISIF’s economic impact focus will shift more towards near term economic stimulation and employment, with a view to support stabilisation and recovery of the Irish economy; and
  • ISIF will invest on a commercial basis to enable otherwise viable medium and large-scale businesses to sustain themselves in the near term, irrespective of their sector, and for these businesses to deliver ongoing growth through their ability to persist and support employment over the medium term.
  • Further details, including a guidance on the initial information required for an application can be found at https://isif.ie/pandemic-stabilisation-and-recovery-fund

2. Credit Guarantee Scheme

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.

3. Restart Fund

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. 

4. SBCI Future Growth Loan Scheme

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. 

Loan features

  • Loan amounts from €100,000 to a maximum of €3,000,000 per eligible applicant
  • Initial maximum loan interest rate of 4.5% for loans < €250,000 and 3.5% for loans >= €250,000. Variable interest rates are subject to change
  • Loan terms range from 8 to 10 years
  • Loans unsecured up to €500,000
  • Optional interest-only repayments available in certain circumstances
  • An “applicant” is an SME or small mid-cap that applies for a loan under the FGLS
  • Applicants for loans greater than €250,000 must submit a business plan to the relevant financial provider

Loans can be used for

  • Investment in machinery or equipment
  • Investment in research and development
  • Investment in business expansion
  • Investment in premises improvement
  • Investment in process innovation
  • Investment in people and/or systems

Loans cannot be used for

  • Finance of specific export operations, or finance contingent upon the use of domestic over imported products. In particular, it should not apply to financing the establishment and operation of a distribution network in other States, or current expenditure linked to the export activity
  • Finance of pure real estate development activity
  • Finance of activities constituting pure financial transactions (e.g. purchase of shares)
  • Loans to undertakings in difficulty
  • Finance of activities forbidden by national or EU law
  • Primary Agriculture (see specific FGLS SME Agriculture Customers section)
  • Refinance to reschedule existing loan or completed project
  • Aid for the acquisition of road freight transport vehicles by undertakings performing road freight transport for hire or reward

Who can apply?

  • Viable micro-, small and medium-sized enterprises (SMEs) and small mid-cap enterprises that meet the eligibility criteria.

An SME is defined by the Standard EU definition [Commission Regulation 2003/361/EC] as an enterprise that:

  • has fewer than 250 employees
  • has a turnover of €50 million or less (or €43 million or less on their balance sheet)
  • is independent and autonomous i.e. not part of a wider group of enterprises
  • has less than 25% of their capital held by public bodies
  • is established and operating in the Republic of Ireland
  • A small mid-cap is an enterprise that is not an SME but has fewer than 500 employees.

Who cannot apply?

An SME or small mid-cap that:

  • is in financial difficulty
  • is bankrupt or being wound up or having its affairs administered by the courts
  • in the last five years has entered into an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts
  • is convicted of an offence concerning professional misconduct by judgement, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity where such illegal activity is detrimental to the European Union's financial interests

How to apply?

  • Borrowers must first complete the Eligibility Application Form to check if they are eligible to apply to Bank of Ireland, AIB, KBC or Ulster Bank for a loan under the Scheme.
  • If eligible they will receive a letter of confirmation from the SBCI which they then present to the bank(s), as part of the credit application process.

5. SBCI COVID-19 Working Capital Scheme

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.

Eligibility

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.

Loan features

  • Loan amounts of between €25,000 to €1.5 million per eligible enterprise.
  • Maximum interest rate of 4%.
  • Loan terms ranging from 1 year to 3 years.
  • Loans unsecured up to €500,000.
  • Optional interest-only repayments may be available at the start of the loans.
  • The loan amount and term are dependent on the loan purpose.

Loans can be used for

  • Future working capital requirements.
  • To fund innovation, change or adaptation of the business to mitigate the impact of COVID-19.

Loans cannot be used for

  • Refinance of undertakings in financial difficulties.
  • Refinance of existing debt (e.g. Terms Loans/Leases/Hire Purchase etc.).

Who can apply?

  • Viable micro, small and medium sized enterprises (SMEs) and Small MidCap enterprises that meet the eligibility criteria.

SMEs are defined by the Standard EU definition [Commission Regulation 2003/361/EC] as enterprises that:

  • Have fewer than 250 employees
  • Have a turnover of €50 million or less (or €43 million or less on their balance sheet)
  • Are independent and autonomous i.e. not part of a wider group of enterprises
  • Have less than 25% of their capital held by public bodies
  • Is established and operating in the Republic of Ireland

A Small Mid-Cap is an enterprise that is not an SME but has fewer than 500 employees

Who cannot apply?

SMEs/ Small Mid-Caps that:

  • Are involved in the primary agriculture and/or aquaculture sector
  • Are in financial difficulty (excluding cashflow pressures caused by COVID-19 impact)
  • Are bankrupt or being wound up or having its affairs administered by courts
  • In the last 5 years has entered in to an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts
  • Are convicted of an offense concerning professional misconduct by judgement, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity where such illegal activity is detrimental to the European Union’s financial interests.

How to apply?

  • Borrowers must first complete the Eligibility Application Form to check if they are eligible to apply to Bank of Ireland, AIB or Ulster Bank for a loan under the Scheme.
  • If eligible they will receive a letter of confirmation from the SBCI which they then present to the bank(s), as part of the credit application process.

For further details

6. Microfinance Ireland COVID-19 Business Loan

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.

Eligibility

Any microenterprise (Sole Trader, Partnership or Limited Company) who is currently trading and is;

  • Not in a position to avail of Bank finance; and
  • Is experiencing a COVID-19 negative impact on their business (The negative impact must be a minimum of 15% of actual or projected in turnover or profit).

Microenterprises are businesses with;

  • Fewer than 10 full-time employees;
  • Less than €2 million annual turnover; and
  • A Balance Sheet with Net Assets that don’t exceed €2m.

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.

Loan Features

  • Business Loans from €5,000 to €50,000;
  • Loans may be used for working capital and required business changes as a result of COVID 19;
  • Loan terms up to a maximum of 3 years;
  • Six months interest free and repayment free moratorium, with the loan to then be repaid over the remaining 30 months of the 36-month loan period;
  • Interest rate of 4.5% if submitted through Local Enterprise Office or referred by borrower’s Bank and 5.5% if an application is made directly with Microfinance Ireland;
  • No fees and/or hidden costs; and
  • Fixed repayments with no penalty for early repayment.

How to apply?

  • Talk to a Business Advisor in your Local Enterprise Office;
  • Register at microfinanceIreland.ie; or
  • Talk to a Microfinance Ireland loan Advisors on 01 260 1007

7. SBCI Credit Guarantee Scheme

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:

  • Inadequate collateral;
  • Novel business market, sector or technology which is perceived by finance providers as higher risk under current credit risk evaluation practices; or
  • Need for refinancing caused by the exit of an SMEs lender from the Irish market.

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.

Eligibility

SMEs may be eligible if they:

  • Are involved in a commercial activity;
  • Are a sole trader, partnership, franchise, co-operative or limited company;
  • In the lender’s opinion have a viable business proposal; and
  • Are able to repay the facility.

Exclusions to eligible SMEs include;

  • Primary production in agriculture, horticulture and fisheries are excluded. Note the food and drinks sectors will be eligible for the Scheme.
  • Refinancing of existing debts will be excluded as the purpose of this Scheme is to facilitate additional lending into the economy. Such arrangements will continue to be dealt with by banks under their current lending arrangements. However, in cases where new lending is sought along with refinancing, the availability of a guarantee in respect of the new lending element should be of assistance in providing an overall package of support to the business, including consolidation of existing debts.
  • Property-related activities will be excluded from the Scheme.

Loan Features

  • Facilities of €10,000 up to €1,000,000
  • Terms of up to 7 years
  • Term Loans, Demand Loans and Performance Bonds.

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).

How to apply

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. 

8. Enterprise Ireland – Sustaining Enterprise Fund

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.

Eligibility

The fund is open to eligible companies which;

  • Employ 10 or more full-time employees;
  • Operate in the manufacturing or internationally traded services sectors;
  • Have had a 15% or greater reduction in actual or projected turnover or profit, and/or, a significant increase in costs directly as a result of COVID-19;
  • If an SME – have applied for and been unable to raise sufficient funding from the market, a financial institution or, where appropriate, the SBCI COVID-19 Working Capital Loan Scheme; and
  • If a large company – have applied for and been unable to raise sufficient funding from and appropriate financial institution.

Who cannot apply?

The following are ineligible companies for the scheme;

  • In financial difficulty on 31st of December 2019 (within the meaning of the General Block Exemption Regulation);
  • That are active in the primary agricultural, fishery or aquaculture sectors;
  • That operate in the coal and steel sector; and
  • Are financial institutions included in the Communication from the Commission on the application, from 1 August 2013, of the State aid rules to support measures in favour of banks in the context of the financial crisis (‘Banking Communication’) (OJ C 216, 30.7.2013, p.1)

Features

  • Funding up to €800,000 for each applicant;
  • Funding will be in the form of repayable advances or equity investments;
  • Funding repayable subject to the project objectives being achieved;
  • An annual administration fee of 4%;
  • Three-year grace period before advances begin being repaid; and
  • Total repayment due by the end of year 5, on successful achievement of the project objective.

How to apply

In order to apply for the Sustaining Enterprise Fund, eligible companies will need to provide:

  • A Business Sustainment Plan which details the business project plan, which if fully implemented, will enable the company to be financially viable
  • Evidence of application for funding through the SBCI or financial institutions
  • Evidence of the need for COVID-19 support funding
  • Identification of the sources of additional funding required to fully implement the business project plan; and
  • Evidence of a drop of 15% or more (or projected) in income arising from the COVID-19 situation.

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 businessresponse@enterprise-ireland.com

Guidance/Information

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.

Listen for more

Nick Ashmore, CEO, SBCI – FINANCE SUPPORT – Working capital loan schemes

Listen to Nick Ashmore discuss the Strategic Banking Corporation of Ireland’s (SBCI) response to the COVID-19 crisis in supporting businesses to access working capital.

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