Government expands Credit Guarantee Scheme

The Irish government this week announced the expansion of the Credit Guarantee Scheme, designed to help small business owners get better access to loan finance.

The scheme is geared to helping viable SMEs which have already been denied conventional bank credit facilities via a State-backed guarantee for 75 per cent of their loan.

Two changes have been announced to allow for the refinancing of loans where an SME’s bank is exiting the Irish SME credit market and to extend the maximum length of the guarantee from three to seven years.

Prior to this, the scheme was only available to firms applying for new loans and was not previously available to businesses that desired to move loans from a bank which is exiting the Irish market.

Mark Fielding, CEO, ISME, believes the changes announced should improve the take-up of the Credit Guarantee Scheme which, to date, has seen “abysmal” levels of interest.

“We are aware of businesses who have been struggling to refinance loans from the exiting banks and had informed Government of this,” said Fielding.

“We are pleased that the relaunched scheme addresses this issue by making the guarantee available to businesses in this situation.

“The extension of the length of the guarantee, from three to seven years, is also a positive development.

“It is imperative now that the Government properly promote this scheme and compel the banks to train their staff to inform relevant clients about it.

“There is no point in investing in a scheme to help SMEs, if the people instructed to administer it are not promoting its existence.

“The onus is on the banks to inform customers that they can apply for a guarantee. They have not been adequately fulfilling this obligation to date but must be forced to do so.”

Date published 24 Feb 2015 | Last updated 24 Feb 2015