COVID-19 Loan Scheme
Farmers are among those who can now avail of “low-cost” loans of between €25,000-€1.5m under the new state-backed COVID-19 Loan Scheme (CLS).
The loan scheme aims to help SMEs access low-cost finance, recognising that “many of them are still getting back on their feet after what has been an incredibly challenging few years”.
The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, the Minister for Agriculture, Food and the Marine, Charlie McConalogue, and the Minister for Finance Paschal Donohoe, launched the package earlier this week.
The CLS is in response to the COVID-19 Credit Guarantee Scheme’s (CCGS) closure at the end of June 2022.
It is a consequence of the cessation of the European Commission’s COVID-19 State-Aid Framework at this time.
As of the end of May 2022, the CCGS had helped 10,357 SMEs in Ireland access finance of €730.2 million.
The CLS benefits from support from the European Investment Bank Group through the European Commission’s European Guarantee Fund.
- This scheme is available to eligible SME and small mid-cap businesses. This includes primary producers (businesses in farming and fishing), established in Ireland;
- A business must also have experienced an adverse impact of a minimum of 15% in turnover or profit due to the impact of COVID-19.
Loans under the scheme:
- Are available for terms of 1 to 6 years;
- Are available without security where the loan amount is less than €500,000;
- Typically feature a lower interest rate than other comparable lending in the market.
- Refinancing: up to 30% of new loans may be allowed for refinancing of existing short-term credit, for example, as arising due to COVID-19 impacts;
- Liquidity/working capital.
Interest rates on loans provided under the scheme will be “lower” than is otherwise “typically available” on similar lending in the market and will vary according to the lender.
Lenders participating in the scheme are into two cohorts.
- For the first, interest rates will be variable. However, they will be capped at an initial maximum rate of 3.7% for loans less than €250,000 and 2.75% for loans of €250,000 and above.
- For loans from the remaining lenders: Minimum discount of 1% relative to their standard rates for loans under the CLS.