SBCI Loan Schemes: Open for Applications
The uncertainty triggered by Brexit is a significant concern for SMEs. While the final outcome of the process remains unclear, it is likely that, in responding to the challenge, many firms will require extra resources, be that in the form of people, capital equipment, materials, or access to increased finance.
Enterprise Ireland has worked with the Department of Business, Enterprise and Innovation on the introduction of two €300 million loan schemes, to help eligible Irish companies secure the resources they need. Both schemes, operated by the Strategic Banking Corporation of Ireland (SBCI), will provide SMEs with the support required to implement changes as they prepare for Brexit, enhancing overall business resilience, whatever developments may occur.
The Brexit Loan Scheme can be used to support new working capital requirements and the development of business plans to mitigate Brexit-related risks. With Brexit preparations also presenting opportunities for Irish business, the Future Growth Loan Scheme can be used to fund longer term investments, such as, the purchase of new machinery, buildings and process innovations.
Loans cannot, however, be used to refinance businesses in financial difficulty or for the refinancing of existing debt.
Brexit Loan Scheme Features
The fund offers SMEs access to affordable lending, with rates comparable to those available across Europe. Here, SMEs are defined as independent businesses with turnover of less than €50m, and fewer than 250 employees.
Loan amounts of between €25,000 and €1.5 million are available per eligible enterprise, with terms ranging from one to three years. Companies will be interested to learn that, for loans up to the value of €500,000, security and personal guarantees are no longer required, previously a barrier to accessing finance.
The maximum rate of interest on loans is 4%. In some cases, optional interest-only repayments are available in the early stages of the loan.
For an overview of the scheme, including details of all key features, visit the SBCI website.
How to Apply for the Brexit Loan Scheme
The application process for the scheme involves two stages. During the first stage, the SBCI will perform an initial eligibility check. If deemed eligible, enterprises progress to the second stage, which involves a credit assessment by the participating lending institutions (currently Bank of Ireland, Ulster Bank, and AIB).
Companies must provide a separate business plan when applying for a loan under the scheme. The process is straightforward and the SBCI has a very useful template with tips on what should be included.
Future Growth Loan Scheme Features
The Future Growth Loan Scheme helps SMEs and Small Mid-Cap enterprises to access loans between €100,000 and €3 million with a term of 8-10 years. Loans can be used to support strategic long-term investments, such as business expansion, R&D or the purchase of assets.
This is a variable rate loan scheme with a maximum interest rate of 4.5% for loans between €100,000 – €250,000 and 3.5% for loans greater than €250,000. Security and personal guarantees are no longer required for loans up to the value of €500,000. For further information on this scheme, visit the SBCI website.
How to Apply for the Future Growth Loan Scheme
Similar to the Brexit Loan Scheme, the application process for the Future Growth Loan Scheme comprises of two stages. An eligibility application form must first be submitted to the SBCI. The SBCI will then confirm eligibility with the applicant in writing. For the second stage the applicant will bring this eligibility confirmation letter to the relevant financial institution when applying for a loan. There are currently four participating financial institutions, Bank of Ireland, Ulster Bank, KBC Bank and AIB. Applicants must produce a business plan for all applications for loans greater than €250,000.
Interested companies should note that the eligibility application forms for both schemes requires a declaration on state aid. If you would like help in defining the state aid received from Enterprise Ireland, please contact your Development Advisor or the Brexit Unit can help you to find the right point of contact.
It is important to note that confirmation of eligibility from the SBCI does not guarantee eligibility from the banks. The participating banks have their own assessment criteria which must be satisfied, such as the ability of the applicant to repay the loan.
Letters of offer from most banks are valid for three to six months from date of issue. Therefore, the applicant does not need to draw down the loan until it is required.
Enterprise Ireland encourages all interested companies to first undertake a thorough review of your funding needs and to prepare the financial and business plan you will need to present to participating lending institutions. When considering choice of lenders, SMEs should review all of the options in the market to ensure that they get the best rate available, remembering that the interest rate offered cannot exceed the maximum rates stated above .
If you require assistance in preparing your financial and business plan, find out more information on Enterprise Ireland’s Finance in Focus support here.