Ireland: Revamped Credit Guarantee Scheme offers greater flexibility and easier access for Irish SMEs

December 2015

Established in 2012, the Irish government’s Credit Guarantee Scheme is intended to help viable businesses refused conventional bank credit facilities. With the Bank of Ireland, AIB and Ulster Bank all participating lenders, the scheme provides an 80% guarantee to participating banks against losses incurred on loans extended. The costs of such guarantees are met, in part, by a two-percent annual premium paid by the borrower. Loans totalling approximately EUR20 million, extended to 156 businesses, have so far, helped create 649 jobs and saved a further 333.

Changes to the scheme in February 2016 promise new opportunities for SMEs hitherto excluded from bank finance.

• The definition of eligible lenders is now extended to include lessors, discount invoicing companies and other non-bank providers.
• The definition of eligible agreements now includes overdrafts, leasing arrangements and invoice financing
• The length of guarantees offered under the scheme is extended from three to seven years.

 Anthony Carey, managing partner of Russell Bedford's Dublin member firm Cooney Carey, commented: “The scheme has proved its value in creating (and protecting) jobs by making finance available to businesses that might otherwise have been forced to close. In extending the range of eligible lenders and products, and by extending the length of guarantees offered, the government have introduced a far greater (and much needed) degree of flexibility for businesses too often ignored by the banks.”