Nick Ashmore (centre) pictured at the launch of partnership with Merrion Fleet, a professional fleet management service provider, November 2015
In this editorial, Strategic Banking Corporation of Ireland CEO Nick Ashmore talks about helping small businesses access the finance they need to start or grow their business.
Just over a year ago, the Strategic Banking Corporation of Ireland (SBCI) announced €800 million in new lower-cost finance for SMEs throughout Ireland. Ever since we started, SMEs have told us that they need financing that is lower-cost and more flexible than what has been on offer in the market in the past. The SBCI is helping to fix that. We have already delivered financing that is more appropriate for their needs. We’re achieving this in two ways.
1. Cheaper funding costs
We’ve sourced cheap funding from a range of partners – KfW, a German development bank; the Ireland Strategic Investment Fund (ISIF); and the European Investment Bank (EIB). Irish SMEs can access the SBCI’s lower-cost funding through one of the five lending partners we’ve teamed up with over the past year. We insist that our lending partners pass on the full benefit of this cheaper funding to the SMEs that borrow it – delivering savings of up to 2% on the interest rate that otherwise apply.
2. Increasing competition
In addition to making it easier for existing lenders to lend at lower rates, we have also brought new lenders to the market.
SBCI funding is now available through three banks (AIB, Bank of Ireland and Ulster Bank) and two non-banks that have ramped up their activity in the SME lending space – Finance Ireland, a specialist car and equipment funder, and Merrion Fleet, which offers fleet finance to SMEs.
Greater competition among lenders makes things better for borrowers – bringing better pricing, better terms and more product innovation.
We will continue to support new entrants to the Irish SME lending market in the months and years to come and look forward to further significant announcements involving new lenders shortly.
We would encourage SMEs to actively look for SBCI loans and SBCI funding. They should visit our website sbci.gov.ie to see for themselves the benefits we can bring them.
They should contact one of our five lending partners to apply for a loan, lease or hire purchase arrangement that can provide the funding they need to help them grow and prosper.
We are also here to serve SME customers of banks which have exited the Irish market. Our lending partners may be able to help these SMEs to refinance their borrowings and give them greater certainty as they make their plans for the medium to long term.
The SBCI is not a panacea for all of the SME sector’s problems but we are successfully providing targeted support that is making a real difference.
In the period to December 2015, over 4,600 SMEs has benefited from SBCI loans, borrowing a total of €172 million. These SMEs are spread throughout Ireland and across a broad range of sectors - including agriculture; wholesale and retail trade; accommodation and food service; and many others.
Over time, we will also look to leverage further support from Europe and address more specific market issues.