SBCI Investment and Working Capital Loans

Initial Product Program

The following product features are available through the partner On-Lenders with SBCI’s support, subject to the financial institutions’ own credit policies and procedures.

SBCI Investment & Working Capital Loans

With SBCI providing low cost funding to eligible SMEs, these products will deliver the following benefits:

Product Features

  • Lower interest rates
  • Available for both investment and working capital purposes
  • Minimum loan maturity of 2 years
  • Loan amounts up to €5m

In addition, subject to the financial institutions’ credit policies and procedures, the following features may also be available to qualifying SMEs:

  • Repayment schedule flexibility
  • Loan maturity of up to 10 years
  • Facility maturity tailored to correspond with investment life cycle

Example 1 – Discounted Interest Rate Loan

A family-run SME which operates a small manufacturing facility needs to upgrade a key piece of machinery which is nearing the end of its useful life and requires frequent maintenance. The new machine will increase production efficiency and will benefit from a maintenance warranty for 2 years. The SME requires a loan of €400,000 to fund the investment, and will seek to repay over a term of 5 years.

Existing Products

In this scenario without SBCI funding, the SME’s bank may approve a loan for the full amount of €400,000 at its standard business rate of, say, 6.50% interest, over a 5-year repayment term. Alternatively, an asset leasing firm may provide a leasing facility for €400,000 at a rate of 7.50% over 5 years; however, the SME will not own the asset at the end of the period.

SBCI Loan

The SBCI loan, provided through its On-Lender, is approved at, say, 5.00% over the same 60-month repayment term. The reduced cost of the SBCI loan is illustrated below:

Existing Loans Existing Leasing SBCI Product
Facility Amount €400,000 €400,000 €400,000
Interest Rate 6.50% 7.50% 5.00%*
Facility Term 60 Months 60 Months 60 Months
Monthly Repayment €7,826 €8,015 €7,548
Total Cost of Credit €69,588 €80,911 €52,910

* Estimated SBCI nominal rate. SBCI rates may vary by On-Lender and according to loan size and other factors. Repayments calculated on basis of constant payments and constant interest rate.

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Example 2 – Repayment Flexibility

An event equipment hire business in Galway needs to invest in audio-visual equipment to expand its range of services. It requires an additional loan facility of €300,000 to fund the capital expenditure upfront, but given the lead time to securing new conference bookings, it does not expect a return on its investment for approximately 12 months. The business has secured advance bookings covering the period in 12-24 months’ time, which support the credit worthiness of the proposed loan.

SBCI Loan

The SBCI loan, provided through its On-Lender, is approved at a discounted rate of 6.35%, with repayments commencing 12 months after drawdown to correspond with the investment life cycle. The flexible terms of the SBCI loan are illustrated below:

SBCI Product
Facility Amount €300,000
Interest Rate 6.35%*
Loan Term 60 Months (repayments over 48 months)
Repayments
Commence
12 months post-drawdown

* Estimated SBCI nominal rate. SBCI rates may vary by On-Lender and according to loan size and other factors.

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Example 3 – Working Capital Loan

A building supply company in west Dublin requires a working capital facility of €250,000 to finance increased stocking requirements. Traditionally the company used its overdraft facility to fund both its current and capital expenditure, however this has proven costly and has resulted in a hard core of residual debt remaining in the overdraft.

Existing Products

In this scenario without SBCI funding, the SME’s bank may approve a revolving overdraft facility of €250,000 at a standard business overdraft rate of, say, 7.85% interest.

SBCI Loan

The SBCI working capital loan, provided through its On-Lender, is approved at 4.50% over a 36-month repayment term. The reduced cost of the SBCI loan is illustrated below:

Existing Products SBCI Product
Facility Amount €250,000 €250,000
Interest Rate 7.85% 4.75%*
Loan Term Revolving Annually 36 Months
Monthly Repayment €7,817 (36 months) €7,465
Total Cost of Credit €31,405 €18,729

* Estimated SBCI nominal rate. SBCI rates may vary by On-Lender and according to loan size and other factors. Repayments calculated on basis of constant payments and constant interest rate.

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Example 4 – Investment Loan for SME “Generation Change”

The owner of a furniture retailing business employing 14 people in Leitrim is due to retire in the coming months, and as part of her succession planning, is seeking to sell her shareholding and ensure the continued operation of the business.

The existing management team comprises 3 senior employees, each of whom has over 10 years’ service with the company, and they are interested in acquiring the business from the retiring owner. The transition of ownership will allow the existing SME to continue as a going concern and maintain local employment, and has the potential to bring fresh impetus to the development of the business.

The SME requires a loan of €600,000 to fund the acquisition, and will seek to repay over a term of 5 years, in line with the projected cashflows of the business.

SBCI Loan

SBCI loans specifically allow for investment to facilitate generation change, or staff-related SME transfer which ensures the continuation in economic activity of the affected SME. This financing applies only to cases where both the buyer and the SME to be sold are eligible SMEs.

The SME may therefore avail of the lower interest rates and longer-term funding afforded by SBCI loans relative to other lending products.

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State Aid

  • The provision of funding for these loans is being made under the De Minimis regulations which permit the provision of State Aid. SMEs may avail of De Minimis Aid provided it does not exceed €200,000 in any 3-year period. In the case of certain loans, State Aid may arise by virtue of the discounted interest rate received by the SME on SBCI loans, and if so, the SME will be advised. It is important to note that the Aid is not the amount of the loan.
  • Full details available at Regulations.

Summary of Excluded Activities

  • Finance of specific export operations, or finance contingent upon the use of domestic over imported products. In particular, it should not apply to financing the establishment and operation of a distribution network in other States, or current expenditure linked to the export activity.
  • Finance of pure real estate development activity
  • Finance of activities constituting pure financial transactions (e.g. purchase of shares)
  • Loans to undertakings in difficulty
  • Finance of activities forbidden by national or EU law
  • Agriculture (see specific SBCI Agricultural Investment Loan product), aquaculture and fisheries loans.
  • Refinance to reschedule existing loan or completed project (see specific product for Refinance of Exiting Banks)
  • Aid for the acquisition of road freight transport vehicles by undertakings performing road freight transport for hire or reward.
  • Please refer to the link above for comprehensive detail on specific exclusions.

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