Credit Guarantee Scheme changes will assist SMEs

The Government's Credit Guarantee Scheme was set up in 2012, with the aim of helping viable businesses who have been refused conventional bank credit facilities.

Minister Nash pictured at Emer's Kitchen

In nutshell, the scheme enables the Government to go guarantor (up to 75) for an SME's loan, that has growth and job creation potential. Since its launch, the Scheme has helped 156 businesses with loans of approximately €20m backed by the guarantee, creating  649 jobs and maintaining a further 333. That said there were limitations to the scheme - up to recently the scheme was only available to businesses applying for new loans and was not available to companies who wished to move loans from a bank which is exiting the Irish market. Not anymore. 

Changes announced this week to the Credit Guarantee Scheme are aimed to open this scheme to even more assist more small and medium sized enterprises to get loan finance. Two main changes are: 

  • Allowing the scheme to consider refinancing loans where an SME’s bank is exiting the Irish SME credit market
  • Extending the maximum length of the guarantee from three to seven years.

Announcing the changes, Minister Ged Nash said,“Clearly the job creation element of the Credit Guarantee Scheme is very welcome but overall it has not had the impact that we had hoped for. I believe that the changes we are introducing today will mean that many more SMEs will be able to avail of the scheme. This in turn will mean more jobs can be created by SMEs and they may also catch a break when it comes to being able to avail of better deals on their loans as a result of some banks exiting the market.”

Some more detail on the scheme....

The Credit Guarantee Scheme was launched in 2012, as a measure in Government's Action Plan for Jobs. The Scheme aims to provide credit to job-creating SMEs who currently struggle to get finance from the banks. It is intended to address market failure affecting commercially viable businesses in two specific situations – namely, where businesses have insufficient collateral, and where businesses operate in sectors with which the banks are not familiar. 

The Credit Guarantee Scheme provides a 75% guarantee to banks against losses on qualifying loan facilities. Bank of Ireland, AIB and Ulster Bank are participating lenders. The borrower pays a 2% annual premium, which partially covers the cost of providing the guarantee.

Since 2012, the Credit Guarantee Scheme has helped to create 649 jobs and maintain a further 333.  Some 156 businesses have availed of the scheme to date with loans of approximately €20 million backed by the guarantee.

To find out more....

Businesses seeking to avail of the Credit Guarantee Scheme can approach a participating bank to find out more. 

The revised Credit Guarantee Scheme is a measure in Action Plan for Jobs 2015, Government's key strategy to promote job creation. 

It's also one of the supports in the Supporting SMEs Online Tool which has over 80 Government supports for SMEs in one location.