The COVID-19 Credit Guarantee Scheme is extended by six months

In September 2020, the COVID-19 Credit Guarantee Scheme (CCGS) was launched in response to the pandemic to provide access to appropriate finance for SMEs and small mid-cap companies in Ireland (with less than 500 employees). The €2 billion lending cap was set in 2020 to give confidence to the business community that lending would be available to meet their needs resulting from the impact of COVID-19.

Due to expire at the end of December 2020, the European Commission approved the latest extension of the Temporary State-Aid Framework, under which the CGCS operates, to the end of June 2022 and therefore Ireland has extended the CGCS until this deadline also, making low-cost loans available to eligible businesses until June of this year.

In order to qualify for the CGCS, companies must declare an adverse impact of at least 15% of actual or projected turnover or profit due to the impact of COVID-19. The size of loan available is linked to turnover (25% of 2019 turnover) or wage costs (double annual wage bill in 2019) and is 80% State guaranteed with the remaining 20% of the risk of the loan sat with the lender.

Three banks, six non-bank finance providers and 19 credit unions are currently lenders under the Scheme, and to date have approved loans to more than 9,000 businesses, signalling the most rapid deployment of lending in the State’s history. According to Tánaiste, it estimates that over 63,000 jobs have been maintained which would otherwise have been at risk without the CGCS.

Tánaiste says: “The extension of this Scheme will give business a level of certainty that if they need liquidity, they will be able to access low-cost loans, unsecured up to €250,000. This will help business react to ongoing developments and take advantage of any opportunities over the coming months. This Scheme is just one of the ways we are backing businesses and helping them through this challenging period. The EWSS, CRSS, commercial rates waiver and other grants remain in place.”

Easier access to credit, lower interest rates and longer repayment periods for business than would otherwise be the case, thanks to the CGCS, means that businesses, which may otherwise have failed during the pandemic, have a chance for survival, unlike the aftermath of the last recession when access to credit for viable but vulnerable businesses was a huge problem.

For more information on the specific features of the COVID-19 Credit Guarantee Scheme, your eligibility and to discuss your financial needs, please contact us at EFM Ireland. We are an international team of Finance Directors and Business Advisors, providing practical commercial support to hundreds of growing businesses across Ireland and the UK.

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