The Strategic Banking Corporation of Ireland (SBCI), set up by the Government to make it easier and cheaper for Irish SMEs to borrow, has today published a progress update for 2020 and its new strategy for the period 2020 to 2025.
Progress update to 2020 – key points:
- €1.8bn has been committed by SBCI to Irish SMEs via on-lending partners.
- 30,000 SME/farmers have drawn down €1.5bn in lower cost SBCI loans.
- 6,000 SMEs/farmers have availed of one of the SBCI’s 5 risk-sharing schemes offering lower cost and easier access for SMEs than traditional loans.
- The strength of take-up of SBCI risk-sharing products means they will become a key SBCI support channel for SMEs in future.
- Over 2,000 SMEs have expressed interest in the new Covid-19 Loan Scheme, with 189 loans approved totalling €33 million in its first 6 weeks.
- 61% of SME borrowers used SBCI funding for investment in sustaining and growing the business, with 39% for working capital.
- SBCI has partnered with 11 lenders since inception, of which 7 are non-bank lenders; further partnerships will be announced during 2020.
- SBCI has achieved a broad reach across multiple sectors: agri-food sector accounts for 23% of SBCI loans, wholesale/retail 16% and manufacturing 13%.
- In line with its counter-cyclical role, the SBCI is rapidly stepping up its supports in conjunction with the Government and EIB Group in response to the Covid-19 crisis.
New strategy for the period 2020 to 2025 – key points:
- SBCI will launch a range of new SME funding options during the period 2020-2025.
- SBCI will be Ireland’s conduit for major European SME funding programmes.
- New SME energy retrofit schemes.
- New loans to higher risk, higher growth SMEs.
- New forms of finance such as mezzanine/junior debt and second-lien guarantees.
- New fast-track digital eligibility applications through a customised SME platform being developed.
Comment by Paschal Donohoe TD, Minister for Finance and Public Expenditure and Reform:
“I welcome today’s progress update by the SBCI and the publication of its new strategy for the period 2020 to 2025.
The SBCI has been very effective in its first phase, delivering €1.5bn in support for over 30,000 Irish SMEs in need of low-cost, easy-to-access finance through 11 different on-lending partners.
The new strategy published today sets out a roadmap for the SBCI to continue to support SMEs, making a range of new loan and leasing products available by teaming up with the Government and European partners to channel EU supports to Irish SMEs.
At a time when Irish SMEs face unprecedented challenges, the SBCI has a clear strategy to build on its existing range of supports and help them to survive, recover and grow in the months and years ahead.”
Comment by Nick Ashmore, SBCI Chief Executive:
“The SBCI has grown and evolved substantially in its 6 years in operation, from an institution that started out focusing on sourcing lower cost funding to one that has shaped new, SME-friendly loan and leasing products and teamed up with both existing lenders and new market entrants and both banks and non-banks.
Our strategic plan demonstrates our commitment to continue innovating and developing new products that meet the changing needs of Irish SMEs throughout the economic cycle.
While we have been successful in promoting competition, enhancing SME access to finance and bringing down the cost of borrowing, Ireland’s SMEs need more and better forms of finance now more than ever to help them overcome the immense challenges posed by Covid-19. We will focus relentlessly on giving SMEs the financing tools they need.”
- Full details of the SBCI’s new strategy for 2020-2025 have been published on the SBCI website. The strategy was designed by the SBCI Board in conjunction with Government and SME stakeholders and builds on an external strategic review undertaken in 2019 by EY.
- In developing the new strategy, the SBCI took into account changes in the SME funding environment since 2014 that resulted in improvements in liquidity conditions and in the ability of SMEs to access funding.
- While the SBCI focused on these issues in its early years, as they improved over time the SBCI focused on other potential changes to the SME funding market that could deliver benefits for SMEs. These included promoting competition by increasing the number of lenders in the Irish SME market and reducing the gap between the cost of SME loans in Ireland versus other EU countries. The SBCI also sought to address the “access to finance” challenge for SMEs through the introduction of risk-sharing instruments, which can both lower the interest rate charged and reduce the security requirements for a loan.
- The SBCI also began rolling out new measures to reduce the amount of capital needed by lenders to lend to SMEs, enhance the interaction with SMEs through delivering the eligibility process for its schemes, and promote greater levels of awareness of new products and services in the market.
The SBCI supports borrowers through 5 risk-sharing schemes tailored to meet specific challenges facing SMEs. Risk-sharing allows lending partners to provide loans without taking all of the credit risk, which facilitates easier access for SMEs to these loans through more attractive security requirements, lending criteria or loan pricing.
Government of Ireland Credit Guarantee Scheme
(SBCI took over operation of the scheme in 2016, amended scheme launched in 2018, 135 loans totalling €27m covered by scheme)
Agriculture Cashflow Loan Scheme
(Launched in 2017, €150m capacity fully utilised)
Government of Ireland Brexit Loan Scheme
(Launched in 2018, €300m capacity, €200m of which was diverted to set up the initial SBCI Covid-19 Working Capital Scheme). 260 loans totalling €53.5m approved to date
Government of Ireland Future Growth Loan Scheme
(Launched in 2019, initial €300m, current capacity almost fully utilised, announcement to extend by €200m in 2020)
Government of Ireland Covid-19 Working Capital Loan Scheme
(Launched in March 2020, 2 weeks after Covid restrictions were introduced, €200m capacity, additional €200m announced in April 2020)