22 Sep 2016 | 12.08 pm
Accessing Lower Cost Finance
Nick Ashmore, CEO of the Strategic Banking Corporation of Ireland, explains how SMEs can benefit from an SBCI loan
22 Sep 2016 | 12.08 pm
Providing access to lower cost finance lies at the heart of the Strategic Banking Corporation of Ireland (SBCI) mission. The SBCI was set up in late 2014 to address issues SMEs were facing in the credit market in Ireland following the banking crisis.
Specifically, the SBCI was put in place to secure sources of long-term lower cost funding for SMEs. An initial €800m of funding from the German development bank, KFW, the European Investment Bank and the Ireland Strategic Investment Fund has been fully allocated to our current lending partners.
So far (up to the end of June 2016), the SBCI has supported 8,619 Irish SMEs with loans totalling €347 million. Between them these SMEs employ over 43,000 people. SMEs were borrowing funds at an average of 1.5% less than they could source elsewhere. Loan sizes have varied from €1,200 to €5m, with a good geographic spread throughout Ireland.
Almost a quarter of all our loans have so far been drawn down by agri-businesses, while the accommodation and food trade (hotels, restaurants), wholesale and retail trade (shops, distributors) and the administration and support sector have also featured strongly.
SBCI finance is available to businesses in almost every sector of the Irish economy, and we encourage any SME that has not thought about an SBCI loan to consider the benefits our finance can bring.
The benefits for businesses who secure loans through SBCI include a lower cost and longer repayment periods, delivering cashflow advantages to SMEs. So far, 87 per cent of SBCI loans have been used by SMEs for investing in growing their business, with the remaining 13 per cent split between working capital and refinancing loans from banks that have exited the Irish market.
Lowdown On Lenders
SBCI is not a retail bank lending directly to businesses; rather it acts as a channel for lower cost funding from European and domestic sources to financial institutions, with the cost and flexibility benefits passed along to SME borrowers.
Along with traditional banks, the SBCI has to-date brought on board four non-bank lenders. The successful rollout of SBCI loans owes much to the commitment and SME focus of our on-lending banking partners AIB, Bank of Ireland and Ulster Bank along with non-banking partners Finance Ireland, Merrion Fleet, First Citizen Finance and Bibby Financial Services Ireland.
Bringing non-bank lenders into the market is a way of driving competition along with providing more niche loan products including leasing, hire purchase and fleet finance, agri• equipment finance and invoice finance.
The SBCI is preparing for exciting new developments that will allow us to play an even bigger role in supporting Irish business. These are challenging times for Irish SMEs and, given the SBCI is here to make some of these difficulties easier to overcome, we encourage you to get in touch and share your business experiences and ideas with us.
You can find further information on how to apply for SBC/loans and our contact details at www.sbci.gov.ie.
Photo: Nick Ashmore, CEO of the Strategic Banking Corporation of Ireland