Funding to assist viable but vulnerable firms in manufacturing and internationally traded sectors impacted by the fall-out of the war in Ukraine.
The Government is to pass legislation to unlock up to €1.2bn low-cost loans to SMEs and mid-cap firms under the upcoming Ukraine Credit Guarantee Scheme.
As well as this a new €200m Ukraine Enterprise Crisis Scheme has been created to assist firms suffering liquidity problems as a result of Russia’s war on Ukraine.
“Many businesses are very worried heading into the winter”
There will be two streams of funding under the Scheme to assist viable but vulnerable firms of all sizes in the manufacturing and internationally traded services sectors.
The first stream will assist firms suffering liquidity problems as a result of Russia’s war on Ukraine, and the second stream will also help those impacted by severe rises in energy costs.
“Many businesses are very worried heading into the winter,” said Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, TD.
“The cost of energy and doing business is rising. Interest rates are going up. Consumer confidence is waning. The war on Ukraine is driving up energy and commodity prices and it’s making it harder to get certain materials. At a time like this, you can rely on us to back business and protect jobs to ensure a strong economy.
“The Ukraine Enterprise Crisis Scheme will help businesses competing internationally and suffering the broader effects of the war in Ukraine as well as increasing energy costs.
“It will assist companies most exposed to the significant increases in energy costs largely driven by Russia’s brutal invasion of Ukraine and other negative effects of this crisis. This particular Scheme will not be limited to agency client companies but will be limited to manufacturers and exporters.”
Ukraine Credit Guarantee Scheme
The Tánaiste also confirmed that the Cabinet has approved the publication of legislation to unlock up to €1.2bn low-cost loans to SMEs and small mid-caps (up to 500 employees) under the Ukraine Credit Guarantee Scheme.
It will open before the end of the year and provide low-cost unsecured working capital for SMEs and primary producers to help them to spread the increased input costs and limit disruption to supply chains.
“In recent years, the Government, working with the SBCI, has stepped in to underwrite low cost, unsecured loans for business. These State-backed loans are working well: 10,000 SMEs availed of the €2bn Covid Credit Guarantee Scheme.
“Whatever happens, you can rely on us to make sure that our economy stays strong, so that we have the resources to continue helping you with the cost of living, and continue investing in vital public services and public infrastructure like housing.”
The Credit Guarantee (Amendment) Bill 2022 will make amendments to the Credit Guarantee Scheme Act 2012 (as amended) to facilitate the creation of a €1.2 billion Ukraine Credit Guarantee Scheme, as part of the provision of a suite of additional aids to businesses during this time of economic volatility and disruption.
The Enterprise, Trade and Employment Committee of the Oireachtas has agreed to the Tánaiste’s request to waive the requirement for pre-legislative scrutiny for this Bill.
How the Ukraine Enterprise Crisis Scheme will work
- Stream 1 of the Ukraine Enterprise Crisis Scheme will address direct liquidity issues, with aid of up to €500,000 in grants, repayable advances, equity, and/or loans. Applicant will have to demonstrate the impact of the Ukraine war on their business including supply chain and input cost increases including energy. Aid will be granted to implement a Business Sustainment Plan.
- Stream 2 of the Scheme is for “energy-intensive businesses” (where energy cost was at least 3% of turnover prior to the crisis). It will be a grant of up to €2m for costs incurred between February and December 2022. The quantity of units of gas and electricity used to calculate the eligible costs must not exceed 70% of consumption for the same period in 2021 – this ensures that companies do not receive compensation for increased energy costs that have resulted from the company increasing production output compared to 2021.
Energy efficiency plan
For both Streams applicants must submit an energy efficiency plan either planned or underway – ratified by senior management of the company. Companies without such plans will be directed to SEAI and Enterprise Ireland climate action measures – particularly consultancy initiatives aimed at preparing an energy efficiency plan. This may increase the number of companies who will prepare energy efficiency plans in the medium to long run.
The Scheme will be implemented through Enterprise Ireland, IDA and Údarás na Gaeltachta on behalf of the Department of Enterprise, Trade & Employment.