The Ukraine Credit Guarantee Scheme is a new State-backed scheme to provide low-cost finance to help businesses affected by the current conflict in Ukraine.
It aims to support businesses affected by current inflationary pressures, particularly mounting energy costs.
The scheme offers discounted interest loans of up to €1,000,000 per borrower, which can include
- term loan facilities,
- working capital,
- asset finance and
- overdrafts
It is operated by the Strategic Banking Corporation of Ireland (SBCI), which was established in 2015 to provide finance for small and medium-sized businesses. It has already successfully operated a number of similar low-cost business loan schemes.
An attractive aspect of the new scheme is that most loans of less than €250,000 will not require the borrower to provide any personal guarantee or other security.
Total funding of €1.2 billion has been allocated towards the scheme. It will operate until it is fully subscribed, or until 31 December 2024 if later.
The scheme is open to small businesses established and operating in the Republic of Ireland, who can show that:
- Their costs have increased by a minimum of 10% since 2020 due to the impact of the conflict in Ukraine.
- They require finance on foot of difficulties being experienced due to the conflict in Ukraine, and for working capital (including liquidity needs), and/or investment.
- The finance sought is new. Refinancing of existing loans is not permitted.
Exclusions
The following activities are excluded from the scheme.
• Property development ventures
• Share purchases and other financial transactions
• Assistance to businesses in financial difficulty
• Activities forbidden by national or EU law
• The purchase of Road freight transport vehicles
• Some export-specific activities, including setting up distribution networks abroad
• The purchase of agricultural land
How to apply
Step 1 – Applicants must first register on the SBCI Hub https://hub.sbci.gov.ie/ and submit an online Eligibility Application Form to check if they can access the scheme.
Once this is done, each successful applicant will be issued with an eligibility code.
Step 2 – The applicant must provide this eligibility code to a participating bank or other lender to begin their credit application process.
The SBCI eligibility code is not a guarantee of credit approval and does not oblige the on-lender to provide finance.
Approval of finance is subject to each of the participating lenders’ credit criteria, policies and procedures.
Loan Criteria
The maximum loan per borrower under the scheme cannot exceed €1 million, and will in most circumstances be determined by one of the following two criteria:
- 15% of the borrower’s average total annual turnover over the last three accounting periods; OR
- 50% of the borrower’s energy costs over the 12 months preceding the month when the application for credit is submitted.
In limited cases applicants may be able to borrow to fund their anticipated liquidity needs for 12 months.
Finance providers may require borrowers to provide them with certain evidence before deciding whether, and under what conditions, they might grant them a loan. These requirements vary but are likely to include Management Accounts, Financial Accounts, Business Plan, etc.
Conclusion
The scheme is a very promising one for any thriving business that is considering expansion or other investment. Its most attractive terms are its offer of discounted loan rates and the waiving of the normal requirement to provide security or personal guarantee before a loan can be drawn down.
If you think your business can avail of it, I would encourage you to register as soon as possible. This will put you on the best possible footing to apply to your bank for funding under the scheme.
Thomas McGibney & Company 