What is the Credit Guarantee Scheme?
Bank of Ireland has strongly welcomed the launch of the new Covid-19 Credit Guarantee Scheme, designed to support Irish businesses navigate the ongoing pandemic. The Bank has created a new online portal bankofireland.com/cgs to make the application process as simple as possible, and will start accepting applications from Thursday 10 September. Bank of Ireland is also launching a €400,000 marketing campaign across TV, radio, print and digital platforms to help drive awareness of the scheme nationwide.
Loans under the Scheme range from €10,000 to €1 million, for terms of up to five-and-a-half years. Financing will be offered through a range of products, including term loans and working capital loans. The Covid-19 Credit Guarantee Scheme is the biggest ever state-backed loan guarantee in Ireland. The Scheme offers an 80% Government guarantee to participating lenders to provide Irish businesses, including those in the farming and fishing sectors, with access to low interest loans as they respond to the impacts of COVID-19.
The continuation of the scheme for another six months will provide options for small businesses who need increased liquidity as they move toward a changed but more stable trading environment.
The Credit Guarantee Scheme is open to SMEs. The aquaculture, primary agriculture, financial services, education, insurance services, property owners and investment industries sectors are not eligible for the scheme.
Reforms to the Scheme were provided for in 2016 amending primary legislation. The revised scheme was launched in July 2018 and provides;
- An increase in the level of risk the State will take from 75% to 80% of individual loans
- An extension of the scope to cover other financial product providers, like lessors, invoice discounters etc.; and
- An extension of the definition of loan agreements to include non-credit products and overdrafts.
The legislation underpinning the revised scheme also empowers the Minister to give counter-guarantees that will enable the SBCI (in their capacity as a National Promotional Financial Institution) to unlock matching guarantee facilities from EU sources and thus better share risk across banks, the Minister and the EU.