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Covid-19 Credit Guarantee Scheme (Covid-19 CGS)

The Covid-19 Credit Guarantee Scheme is designed to assist businesses, including Primary producers, impacted by Covid-19 to access credit.

The Covid-19 Credit Guarantee Scheme (the “Scheme”) is provided by the Government of Ireland to facilitate lending to Micro, Small and Medium-sized Enterprises, and Small Mid-Caps adversely impacted by Covid-19. This includes Primary Producers – Agriculture/Fishing. The Covid-19 Credit Guarantee Scheme facilitates the provision of liquidity and working capital to businesses with an initial focus on term and working capital loans. The Scheme enables a borrower impacted by Covid-19 to access credit. The borrower contributes to the cost of the Scheme by paying a guarantee premium on the credit advanced. This premium is separate from and is in addition to the cost of the credit advanced.

  • Loans from €10,000 to a maximum of €1,000,000 per borrower, subject to Loan Amount Criteria, see below for further details.
  • Terms of between 3 months up to 5.5 years.
  • Loan Amounts =<€250,000 will be unsecured (unless it is a requirement of the product feature e.g. asset finance, invoice discount facilities).
  • Amounts >€250,000 may be secured however, a personal guarantee may only be sought in circumstances where it is required to capture supporting security, or where it is an uncollateralised personal guarantee and is limited to a maximum of 20% of the initial finance agreement amount.
  • Loans will be available up to end of December 2020.
  • Up to 12 months interest and / or capital moratoria are possible under the Scheme, these remain at the discretion of the participating finance provider.
  • The Scheme will permit the refinance and rollover of debt incurred as a result of Covid-19: e.g. Covid-19 related expenses that were initially funded through short term/temporary facilities such as overdrafts.

The scheme is currently available through the following participating lenders:

Additional lenders will be added in the coming weeks.

Viable micro, small and medium-sized enterprises (SMEs), primary producers and small mid-cap enterprises that meet the eligibility criteria and have or expect to have a reduction of minimum 15% in their turnover or profitability as a result of Covid-19. SMEs are defined by the Standard EU definition [Commission Regulation 2003/361/EC] as enterprises that:

  • have fewer than 250 employees
  • have a turnover of €50 million or less (or €43 million or less on their balance sheet)
  • are independent and autonomous i.e. not part of a wider group of enterprises
  • have less than 25% of their capital held by public bodies
  • is established and operating in the Republic of Ireland

A small mid-cap is an enterprise that is not an SME but has fewer than 500 employees.

Businesses that cannot apply for this product include those that:

  • are in financial difficulty: The guarantee may not be granted to undertakings that were already in difficulty (within the meaning of the General Block Exemption Regulation) on 31 December 2019: In derogation to the foregoing, aid can be granted to micro or small enterprises (within the meaning of Annex I of the General Block Exemption Regulation) that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency procedure under national law, and that they have not received rescue aid or restructuring aid.
  • are bankrupt or being wound up or having its affairs administered by courts
  • in the last five years have entered in to an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts
  • are convicted of an offence concerning professional misconduct by judgement, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity where such illegal activity is detrimental to the European Union’s financial interests

  • Working capital or investment requirements

The amount of credit that can be obtained by a borrower under the Scheme (whether under one or more finance agreements) is subject to the Scheme rules and the Temporary Framework. The maximum amount of the credit that is permitted to be advanced to a borrower under the Scheme cannot exceed €1m, and will be determined by one of the following three criteria:

  • double the borrower’s annual wage bill for 2019, or for the last year available. In the case of a borrower created on or after 1 January 2019, the maximum loan must not exceed the estimated annual wage bill for the first two years in operation.
  • 25% of the borrower’s total turnover in 2019.
  • in limited cases and with appropriate justification, the amount of the loan may be increased to cover the liquidity needs of the borrower from the moment of granting for the coming 18 months for SMEs and for the coming 12 months for Small Mid-Caps.

You will need to provide certain documents to the finance provider as part of this application process to determine and evidence the maximum credit amount which you are entitled to apply for. These requirements vary, but are likely to include: - Management/Audited accounts/Business Plan.

The premium rate that will apply will depend on the size of the business and the length of time for which the credit is being advanced, as per the tables below:


SMEs

Duration of Facility 1 year 2 year 3 year 4 year 5 year 5.5 year
Rate % 0.15 0.26 0.29 0.50 0.61 0.68


Small Mid-Caps

Duration Of Facility 1 year 2 year 3 year 4 year 5 year 5.5 year
Rate % 0.30 0.63 0.73 1.19 1.40 1.55

  • Refinance of debt incurred pre the Covid-19 pandemic.
  • Finance of pure real estate development activity.

The following NACE codes are eligible for inclusion under the scheme.

NACE Codes

The lender is ultimately responsible for the credit decision. If declined, the applicant has the option of:

  • using the lender’s internal appeals mechanism;
  • if the original decline decision is upheld, referring the decision to the Credit Review Office

The Covid-19 Credit Guarantee Scheme has been notified to the European Commission on the basis that the credit to be provided falls within the parameters set down in the Temporary State Aid Framework.

On August 17 SBCI launched an open call for expression of interest in the Covid-19 CGS.

The scheme is currently available through AIB, Bank of Ireland, Ulster Bank. Additional lenders will be added in the coming weeks.

There is no need to contact the SBCI, you can apply directly to one of the participating lenders.

The overall amount of the loan to the borrower shall not exceed €1m or

(i) double the annual wage bill (including social charges as well as the cost of personnel working on the undertaking’s site but formally in the payroll of subcontractors) for 2019, or for the last year available. In the case of undertakings created on or after 1 January 2019, the maximum loan must not exceed the estimated annual wage bill for the first two years in operation; or

(ii) 25% of the total turnover in 2019; or

(iii) in limited cases and with appropriate justification, the amount of the loan may be increased to cover the liquidity needs from the moment of granting for the coming 18 months for SMEs and for the coming 12 months for large enterprises. The liquidity needs should be established through self-certification by the borrower.

In limited circumstances the scheme can be used to refinance debt incurred as a result of Covid-19.

Yes. This is subject to the overall scheme limit of €1m and the ability of the applicant to demonstrate adequate repayment capacity.

This depends on the loan amount involved and if the finance provider has all the information it needs to process an application. The finance providers websites provide details on their loan application times.

Yes, you can apply to multiple finance providers for a loan under this scheme. Overall facility will not exceed €1m scheme maximum.

Loans up to €250k are sanctioned on an unsecured basis, loans in excess of this amount may require additional security. This remains at the discretion of the finance provider.

If the loans are with two different finance providers then they will both be on an unsecured basis. If they are with the same finance provider, then security may be required for the amount in excess of €250k.

Interest rates charged on this scheme will vary by provider but will represent a discount on their normal lending rates for term lending.

The premium rate that will apply will depend on the size of the business and the length of time for which the credit is being advanced, as per the tables below:


SMEs

Duration of Facility 1 year 2 year 3 year 4 year 5 year 5.5 year
Rate % 0.15 0.26 0.2 0.50 0.61 0.68


Small Mid-Caps

Duration of Facility 1 year 2 year 3 year 4 year 5 year 5.5 year
Rate % 0.30 0.63 0.73 1.19 1.40 1.55

This premium represents the cost to the Government in providing the 80% guarantee scheme to participating finance providers.

The provision of funding for this scheme is being made under the EU Commission Temporary State Aid Framework. For further details see here.

Where you have received State aid, you will have received a letter from the State body that provided it. Examples of State aid granting bodies include Enterprise Ireland, Bord Bia or the Local Enterprise Office.

It stands for the “Statistical Classification of Economic Activities in the European Community”. It is the standard system used in the European Union for classifying business activity. NACE codes are divided into sectors such as retail, manufacturing, services etc.

See here for details on individual NACE codes.

It means that the main presence of business is in Ireland (excluding Northern Ireland).

You will need to provide certain documents to the finance provider as part of this application process to determine and evidence the maximum credit amount which you are entitled to apply for. These requirements vary, but are likely to include: - Management/Audited accounts/Business Plan.

The applicant is responsible for preparing the business plan. The SBCI encourages all applicants to consider using the expertise of an accountant/financial adviser in this process.