€1bn in liquidity to be made available for Irish SMEs

The Irish Government has revealed a major expansion of supports for all businesses impacted by Covid-19 with up to €1bn being made available.

The expansion includes two Strategic Banking Corporation of Ireland (SBCI) loan schemes by €450m to provide an extra €250m for working capital and €200m for longer-term loans, bringing the total allocation to support liquidity in companies affected by the Covid-19 crisis to €650m.

The measure includes the creation of a €180m Sustaining Enterprise Fund for firms in the manufacturing and international services sectors.

“The measures have been developed to meet the varying needs of Irish enterprise and they are very specifically targeted by size, sector and need”

Measures also include extension of supports for online trading to €7.6m, expansion of Microfinance Ireland funding by €13m to €20m for Covid-19 loans with interest rates reduced from 7.8pc to 4.5pc as well as free mentoring and free online training for all businesses.

The liquidity measures came as business groups like Ibec have warned that bringing the Irish economy – which was in good health prior to the freeze caused by Covid-19 – back on its feet will be a complicated matter.

“This package is a significant step-up in the supports available for all businesses in all sectors at this very difficult time,” Minister for Business, Enterprise and Innovation, Heather Humphreys TD, explained. “The measures have been developed to meet the varying needs of Irish enterprise and they are very specifically targeted by size, sector and need.

“The impact of COVID-19 presents unprecedented difficulties for businesses who have already spent the past three years preparing for the possible consequences of Brexit, but those preparations will stand to us.

“I want to reiterate to firms that we will continue to use all available tools at our disposal to support them and keep money flowing through the economy in the difficult months ahead.

Sustaining Irish enterprise during Covid-19 crisis

Minister Humphreys announced that an additional €450m of lending will be provided through the Strategic Banking Corporation of Ireland (SBCI) for SMEs in all sectors including agri-food.

This will provide much needed liquidity for firms and bring total SBCI Covid-19 lending capacity up to €650m with loans available through the pillar banks.

Firstly, the €200m SBCI Covid-19 Working Capital Loan Scheme will increase by €250m  to €450m. The Scheme is providing essential liquidity support to businesses with over 1,400 applications received by the SBCI so far.

Loans can be between €25,000 and €1.5m at a maximum interest rate of 4pc. Loan terms range from one year to three years and loans can be unsecured up to €500,000. Interest-only repayments may be available at the start of the loans.

Secondly, she announced an additional €200m in Covid-19 funding for the Future Growth Loan Scheme, which will be released in tranches, to provide longer-term loans to Covid-19 impacted businesses. Loan amounts will range €100,000 to a maximum of €3,000,000 per applicant. Loan terms range from 8 to 10 years and loans of up to €500,000 can be unsecured. Interest-only repayments may be available at the start of the loans. The maximum interest rate will be 4.5pc.

In addition, the new €2,500 Business Continuity Voucher, available through Local Enterprise Offices, is designed for businesses across every sector that employ up to 50 people. The voucher can be used by companies to develop short-term and long-term strategies to respond to the Covid-19 pandemic.

These measures are in addition to the €150m of funding capacity in the Government’s Credit Guarantee Scheme, which Minister Humphreys encouraged businesses to avail of. 

The supports also include an additional €30m for microenterprises through the 31 Local Enterprise Offices (LEOs) comprising additional funding for Microfinance Ireland and Trading Online Grants for those businesses that are in a position to do business online while complying with the public health guidelines.

Microfinance Ireland (MFI), which is administering special COVID-19 Loans, will receive an additional €13m in capital support bringing its total lending capacity up to €20m for the coming period.

The Minister is also increasing support for two trading online initiatives to a total of €7.6m – the first for microenterprises in partnership with the Minister for Communications, Climate Action and Environment, Richard Bruton TD, and the second for retailers with over 10 employees.

The first online initiative is an expansion of the €2,500 Trading Online Voucher Scheme for microenterprises.

The second online trading support will be available exclusively for indigenous retail businesses with over 10 employees. The Minister is making a new €2m Covid-19 Retail Online Scheme available through Enterprise Ireland.

The Minister also announced a further two new supports to assist companies planning for the future, a Business Financial Planning Grant from Enterprise Ireland to the value of €5,000 to assist companies to develop a Business Sustainment Plan and to engage the services of an approved Financial Consultant, and a new €2,500 LEAN Business Improvement Grant from Enterprise Ireland and IDA Ireland to help companies quickly access expertise to review and optimise operations at a time of crisis and identify the key measures needed to ensure continued viability.

Sustaining Enterprise Fund

In the manufacturing and international services sectors, which employ over 460,000 people directly and a similar number of indirect employees, Minister Humphreys announced a major new Sustaining Enterprise Fund of up to €180m.

This is specifically aimed at all firms with 10 or more employees impacted by Covid-19 that are vulnerable but viable. The Fund will be operated by Enterprise Ireland, providing repayable advances of up to €800,000 as agreed with the EU under new State Aid rules and, together with leveraged lending from the financial markets, should see up to €500m of additional investment in vulnerable but viable firms.  These grants will only be repayable if and when a business returns to financial good health.

“Businesses are experiencing unprecedented difficulty of varying degrees,” said the Minister for Finance and Public Expenditure and Reform Paschal Donohoe, TD.

“Many have let staff go, many have retained staff through the Government’s Wage Subsidy Scheme and many are shifting their model to adapt to new circumstances. This package of measures being announced today is designed to offer supports to businesses of all hues, from start-ups to more established companies. It is vital that traders examine what is on offer, apply for schemes and loans, many of which are available at reduced rates, to give themselves the best chance of survival during this difficult time.”

Written by John Kennedy (john.kennedy3@boi.com)

Published: 9 April, 2020