Hard-hit SMEs get ‘paltry’ €11m worth of loans under State scheme

Only €11 million worth of loans have been provided to small businesses affected by the pandemic under the Government’s main support scheme, a figure which was described as “paltry” by the head of the Irish Small and Medium-sized Enterprises (Isme) association.

Minister for Business, Enterprise and Innovation Heather Humphreys on Sunday published legislation to expand funding for two of the Government's main emergency loan programmes, including its Microfinance Ireland Covid-19 loan scheme, which offers loans of up to €50,000 to small enterprises.

However, it emerged that in the two months since its initial launch at the end of March, just €11 million in lending to 400 businesses has been approved under the scheme.

Isme chief executive Neil McDonnell described the figure as “totally inadequate” for dealing with the liquidity problem facing the sector.

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“The finance being offered is mostly debt finance, at rates that are too high,” he said.

The loans are being offered at interest rates of 4.5 per cent, not much below the market rate, Mr McDonnell said, and significantly higher than the rates attached to similar schemes in other countries. In the UK, the rate was closer to 2 per cent, he said.

Mr McDonnell also complained that the Government's Covid-19 working capital scheme for business, administered via the Strategic Banking Corporation of Ireland (SBCI), which provides State-backed loans of up to €1.5 million, had seen a very low take-up because of the onerous conditions being applied by banks.

“Where you give loans they should be on the softest possible terms,” he said.

Mr McDonnell said that overall less than €75 million has actually found its way to Irish businesses in enterprise supports since the pandemic began,

Emergency liquidity

A recent Central Bank study estimated that SMEs in the Republic may need up to €5.7 billion in emergency liquidity to help them through the Covid-19 crisis.

Publishing the Microenterprise Loan Fund Amendment Bill 2020 on Sunday, Ms Humphreys said the legislation will "significantly beef up" Microfinance Ireland (MFI) and enable a significant expansion of the Future Growth Loan Scheme, another scheme operated by the SBCI, which provides loans of up to €3 million with terms of up to 10 years to SMEs including farmers and fishers.

The legislation will permit the MFI to raise further funding through the SBCI and increase the ceiling of additional lending for the Future Growth Loan Scheme from €200 million to €500 million, enabling more businesses to be supported.

“Every effort has been made by my department to get this legislation drafted and published as quickly as possible,” Ms Humphreys said. “ The legislation is now ready to go and I hope that it can be enacted as quickly as possible once a new government is formed so that businesses can get access to this vital liquidity,” she said.

Minister for Agriculture Michael Creed said: "The Government is conscious of the challenges that are being faced by all businesses, including those in the agri-food sector."