10 Apr 2020 | 01.02 pm
Enterprise Ireland Will Be Lender Of Last Resort
Sustaining Enterprise funding has to be paid back
10 Apr 2020 | 01.02 pm
Enterprise Ireland will operate and administer a a new €180 million loan scheme for businesses impacted by Covid-19.
The new Sustaining Enterprise Fund provides financial support to Irish companies affected by the coronavirus outbreak. It is available to assist companies in the manufacturing and internationally traded services sectors who have suffered, or expect to suffer, a 15% or more reduction in turnover or profits or an increase in costs as a direct result of Covid-19.
The agency says that repayable funding of up to €800,000 will allow eligible client companies to access liquidity and funding to sustain their businesses in the short to medium term.
The funding is open to all Enterprise Ireland, IDA and Údarás na Gaeltachta clients and other companies employing 10 or more in the manufacturing and internationally traded services sector.
“The first port of call for liquidity support will continue to be SBCI/banks,” said an EI statement. “This new Sustaining Enterprise Fund will be a distinct offer of funding support via a repayable advance which would only be provided where SBCI/bank options have been fully exhausted.”
CEO Julie Sinnamon said: “My strong advice to companies is to prepare an assessment of your financial requirements and progress funding applications to the banks and the Strategic Banking Corporation of Ireland immediately. Enterprise Ireland’s new Business Financial Planning grant will help companies to prepare a Business Sustainment Plan.”
Business minister Heather Humphreys (pictured) also announced three minor supports that will be administered by Enterprise Ireland. They largely build on existing initiatives
• The new Covid-19 Online Retail Scheme will be open to retailers employing over 10 people to develop a more competitive online offer. This competitive call has a budget of €2 million. Successful applicants will receive funding support of up to 80% of project costs, with a maximum grant of €40,000.
• A new Business Financial Planning Grant to the value of €5,000 to assist companies to develop a Business Sustainment Plan and to engage the services of an approved financial consultant when applying for funding.
• A new €2,500 LEAN Business Continuity Voucher to help companies access expertise in reviewing and optimising operations at a time of crisis to identify the key measures needed to ensure continued operations. It is expected that this support would be delivered online in most cases.
For details, download ‘Sustain your business with our support’ brochure.
SBCI Working Capital Loan
Humphreys also announced that an additional €450m of lending will be provided through the Strategic Banking Corporation of Ireland (SBCI) for SMEs in all sectors, including agri-food.
Funding for the SBCI Covid-19 Working Capital Loan Scheme will increase by €250m to €450m. The SBCI says that over 1,400 applications have been received so far. Loans can be between €25,000 and €1.5m at a maximum interest rate of 4%. Loan terms range from one year to three years and loans can be unsecured up to €500,000. Interest-only repayments may be available at the start of the loans.
There is also an additional €200m in Covid-19 funding for the Future Growth Loan Scheme, which will be released in tranches, to provide longer-term loans to Covid-19 impacted businesses. Loan amounts will range €100,000 to a maximum of €3m per applicant. Loan terms range from eight to 10 years and loans of up to €500,000 can be unsecured. Interest-only repayments may be available at the start of the loans. The maximum interest rate will be 4.5%.
For micro enterprises, Microfinance Ireland (MFI), which is administering special Covid-19 loans, will receive an additional €13m in capital support, bringing its total lending capacity up to €20m. The interest rates on these loans has been reduced from 7.8% to 4.5%. Loans can be made up to €50,000 with no repayments required and no interest charged in the first six months.
The minister explained that the reduced rate will be available to all micro enterprises with less than 10 employees, where the application is made through the LEOs or Local Development Committees. The new rate for direct applications to MFI has been reduced to 5.5%.
Export Credit Insurance
Food Drink Ireland, the Ibec group representing the food and drink sector, welcomed the additional liquidity supports but called for the introduction of a short-term export credit insurance scheme, plus a range of other financing measures including greater liquidity supports and loan guarantees.
FDI Director Paul Kelly said even in normal times food and drink manufacturing accounts for €2.7 billion of credit advances annually, which is 60% of total advances to Irish manufacturing.
“Whilst the sector continues to put food and drink on Irish tables, large market outlets for our industry have been decimated,” said Kelly. “Very specific and more ambitious financing measures will be needed to aid recovery.
“Our farmers and food processors have continued to supply Irish consumers through grocery and convenience stores but have seen demand largely disappear in food service and hospitality. Exports are experiencing huge difficulties as well, not just in food service and hospitality but more generally as displaced product creates market turbulence.
“Restarting the Irish food service and hospitality sector and regaining export market positions are of critical importance to the Irish food and drink industry for the rest of 2020 and 2021.”