The Government has launched a number of initiatives under the Action Plans for Jobs Programme aimed at assisting SMEs who have been and may be declined credit by banks.
SME Support Tool
The SME Support Tool is part of the Governments Supporting SMEs Campaign and has been developed to create an increase in awareness of the range of Government supports for start-ups and SMEs.
By answering 8 simple questions will quickly help businesses discover which supports could potentially fit their business.
The Online SME Support Tool can be accessed here.
Credit Review Office
The Credit Review Office was established by Government in 2010 to provide a simple and effective review process for SMEs, sole traders and farm enterprises refused credit from the banks that were, at that time, participating in the NAMA scheme. Banks currently covered by the Credit Review Office are Allied Irish Bank, Bank of Ireland, PTSB and Ulster Bank.
The role of the Credit Review Office is to form an independent, impartial opinion on whether a business is viable and will generate enough cash to repay the loan. The Credit Review Office has no statutory or regulatory powers to overturn bank lending decisions. However, if it is their view that the lending could have been made within acceptable risk boundaries, the bank will be required to comply with this recommendation or explain to the Credit Review Office why it will not do so.
In over 90% of the cases supported by the Office, the banks have accepted the Credit Review Office Opinion and complied with the recommendations.
To be eligible to apply to the Credit Review Office, businesses must have experienced one of the following:
- Have had credit facilities refused, reduced or withdrawn
- Have had difficulty in getting credit or loan facilities of up to €3,000,000
- Have had an unfavourable change to existing credit terms and conditions
Applications should be submitted directly to the Credit Review Office. Some fees will apply.
For more information on the Credit Review Office please visit the Credit Review Office website here.
Microfinance Ireland was established in September 2012 to manage the Microenterprise Loan Fund Scheme.
Microfinance Ireland provides loans of up to €25,000 to start-up, newly established, or growing microenterprises employing fewer than ten people, with commercially viable proposals that do not meet the conventional risk criteria applied by banks. Loans are available for start-up costs, business expansion and working capital.
Microfinance Ireland assesses loan applications and manages the loan book. It works closely with the Local Enterprise Office network which itself provides a range of important business supports, including advice, training and mentoring, to microenterprises.
Applications can be submitted to Microfinance Ireland through the Local Enterprise Office network or directly to Microfinance Ireland itself. The Local Enterprise Office can help business with their applications to Microfinance Ireland and all applications submitted through a Local Enterprise Office will benefit from a discounted interest rate when the loan is approved.
For successful applicants, Microfinance Ireland can also offer invaluable mentoring support which will be provided by an experienced business mentor from the Local Enterprise Office Mentoring Panel. Mentoring is a vital extra support tool that can help businesses, particularly in the early stages.
For more information on the Microfinance Ireland please visit the Microfinance Ireland website here. For more information on the Local Enterprise Office network, please visit the Local Enterprise Office website here.
Credit Guarantee Scheme
The Credit Guarantee Scheme was set up to encourage additional lending to commercially viable SMEs which, under normal lending criteria, are unable to obtain new or additional facilities from their bank. The scheme is intended to address three distinct barriers to lending;
- Inadequacy of collateral,
- where an SME is seeking to refinance due to its bank exiting the Irish market and there is insufficient collateral available to support this refinancing
- Growing or expanding businesses which operate in sectors which are perceived as higher risk under current credit risk evaluation practices
Through the scheme, the Government provides a partial guarantee to banks against losses on qualifying loans to eligible SMEs. Loan sizes can be between €10,000 and €1,000,000 and the Government guarantees 75% of each loan provided under the scheme for up to 7 years. To be eligible for the scheme, SMEs must apply to a participating bank for credit in the normal manner.
Three banks currently participate in the scheme: AIB, Bank of Ireland and Ulster Bank. The facility is provided by the lender using its own capital and subject to its own commercial terms and pricing for the particular lending product provided.
A premium of 2% is payable to the Government.
Strategic Banking Corporation of Ireland (SBCI)
The SBCI is a strategic SME funding company, whose goal is to ensure access to flexible funding for Irish SMEs by facilitating the provision of:
- Flexible products with longer maturity and capital repayment flexibility, subject to credit approval;
- Lower cost funding to financial institutions, the benefit of which is passed on to SMEs;
- Market access for new entrants to the SME lending market, creating real competition.
The SBCI is funded by the European Investment Bank (EIB), by Kreditanstalt für Wiederaufbau (KfW) and by the Ireland Strategic Investment Fund (ISIF). These partners are providing long-term funding at attractive rates to the SBCI to support Irish SMEs.
SBCI funding is available to SMEs through both bank and non-bank specialist on-lenders in Ireland.
For more information on the SBCI please visit the SBCI website here.