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SME Credit Guarantee Scheme (CGS)

A scheme that aims to assist viable SMEs, which cannot currently borrow from their bank, in accessing credit.

The revised SME Credit Guarantee Scheme (CGS) was launched in 2018, replacing the previous 2012 and 2015 schemes. The scheme aims to assist viable SMEs, which cannot currently borrow from their bank, in accessing credit. The scheme provides an 80% guarantee to participating finance providers (currently AIB, Bank of Ireland and Ulster Bank) on qualifying loans to SMEs.

The Credit Guarantee Scheme (CGS) has been designed to address three barriers to lending:

The scheme is operated on behalf of the Department of Business, Enterprise and Innovation (DBEI) by the SBCI and is available from the participating banks (AIB, Bank of Ireland, Ulster Bank). If you are an SME and you are encountering one of the three barriers set out above, you can approach any one of the participating banks and apply for a loan facility under the scheme.

To help SMEs impacted by Covid-19 related issues have access to sufficient working capital, the Government has repurposed the CGS to provide counter guarantees to the banks, mitigating credit risk or need for collateral. The CGS can be used by businesses to obtain loans to support changes they need to make to their business in response to Covid-19.

  • Facilities of €10,000 up to €1m
  • Terms of up to seven years
  • Term loans, demand loans and performance bonds

Reforms to the scheme were provided for in 2016 amending primary legislation that led to the revision of the Credit Guarantee Scheme. This legislation allows new products to be rolled out by the SBCI in 2018 and following years, including the extension of the Scheme to cover loans other than traditional bank loans (i.e. invoice financing, factoring, leasing, etc).

State aid rules apply to the scheme; full details of these available here

SMEs may be eligible if they:

  • are involved in a commercial activity
  • are a sole trader, partnership, franchise, co-operative or limited company
  • in the lender’s opinion have a viable business proposal
  • are able to repay the facility

SMEs may avail of a Credit Guarantee Scheme facility subject to approval by the relevant lender.

Some exclusions apply, full details of these here

The scheme allows for a maximum of a 2% annual premium to the Government in addition to the interest rate/fee charged by the participating bank.

As of 14 July 2019, the premium rate charged has been reduced from the current rate of 1% down to 0.5% for a period of 12 months.

The lender is ultimately responsible for the credit decision.

If declined, the SME 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 scheme is currently available through the following participating lenders: