Scheme to support strategic long-term investment in a post Brexit environment.
SMEs and farmers can apply for loan eligibility from 17th April. At least 40% available to the agri-food sector.
Loans of up to €3 million available. Maximum rate of 4.5% for loans of up to €250,000; 3.5% for larger loans.
Scheme administered for Ministers Humphreys’ and Creed’s Departments by SBCI, an agency of Minister Donohoe’s Department.
Scheme delivered in partnership with the EIB Group and the European Commission.
Minister for Business, Enterprise and Innovation, Heather Humphreys T.D., Minister for Agriculture, Food and the Marine Michael Creed T.D., and Minister for Finance and Public Expenditure and Reform Paschal Donohoe T.D. today (March 27) launched the Future Growth Loan Scheme to allow for the roll out of €300 million in funding to eligible Irish SMEs including farmers.
Businesses will be able to apply for loan eligibility through the SBCI from 17th April. Three finance providers - AIB, Bank of Ireland and KBC - have agreed to participate in the Scheme and negotiations are ongoing with another two. The Government is urging businesses to use the coming three weeks to start preparing their proposals for long-term capital investment.
Minister Humphreys said
With Brexit on the horizon, investment in innovation and diversification has never been more important. For this reason, I would strongly encourage businesses to started putting their proposals together now so that they are ready to start the application process with the SBCI.
Even if firms are unsure if they will draw down a loan, it’s a good idea to have approval in place in case it’s something they need down the line. Notwithstanding the uncertainty that comes with Brexit, it’s better to be safe than sorry.
Minister Humphreys continued:
This Scheme unlocks a large fund of affordable investment financing for the future needs of businesses, and it follows on from the Government’s launch last year of the €300 million Brexit Loan Scheme, which provides working capital support for businesses. These are only two examples of a wide range of State supports available to firms including through Enterprise Ireland, InterTrade Ireland and the Local Enterprise Offices.
The funding allocations for the Future Growth Loan Scheme are €37m from the Department of Business, Enterprise and Innovation and €25m from the Department of Agriculture, Food and the Marine. Of the total budget, €42 million relates to expenditure in 2018 with a further €6 million allocated in 2019 and the remaining €14 million over a third tranche. The Department of Agriculture, Food and the Marine’s share of funding ensures that at least 40% of the fund will be available to farmers and agri-food & seafood businesses.
Minister Creed said:
This is a long-awaited source of finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It will also serve smaller-scale farmers, who often do not have the leverage to negotiate for more favourable terms with their banking institution. Along with products such as Milk Flex, this Scheme will form part of a comprehensive investment package for farmers. I am also delighted to be able to include the seafood sector in the scheme.
Food companies have identified long term investment finance of up to ten years as a critical need which is currently unavailable in Ireland. I am pleased that the Government has been able to deliver this product and its effects will be felt all along the food production chain from primary producer to processor.
This scheme will be available to eligible Irish SMEs including farmers and the agri-food & seafood sectors, to support strategic long-term investment in a post Brexit environment.
Minister Donohoe said:
In December 2018, Ministers Humphreys, Creed and I signed a counter-guarantee agreement backed by the European Commission through the European Investment Fund (EIF), which is part of the European Investment Bank Group (EIB), so that the Exchequer’s investment, totalling €62 million, can be leveraged to provide €300 million to Irish businesses affected by Brexit.
This is an important Scheme that offers long-term financing to small and medium enterprises in Ireland to support them investing strategically in a post-Brexit environment. It is not currently possible for Irish SMEs to access loans of more than seven years and this Scheme which offers loans of between 8 and 10 years, is a very positive development.
Andrew McDowell, European Investment Bank Vice President commented:
Irish companies continue to suffer from Brexit uncertainty. As the EU Bank, the EIB Group is committed to supporting Ireland to mitigate the economic damage to Irish companies. Backed by both the European Investment Bank and the European Investment Fund, the new Future Growth Loan Scheme will enable companies most exposed to Brexit to access EUR 300 million of new long-term financing to make investments that protect jobs and help them to expand into new markets. The Scheme builds on the success of two successful financing initiatives delivered by SBCI and backed by the EIB Group and complements our strengthened direct lending support for Irish business investment.
The Scheme will be delivered by the SBCI. Its CEO Nick Ashmore said:
Today’s launch in conjunction with the European Investment Fund (EIF), European Investment Bank, Minister for Business, Enterprise and Innovation and the Minister for Agriculture, Food and the Marine, will provide support to enable eligible businesses and farmers investing for the long term to innovate, digitalise, find new markets, and to grow into the future. The FGLS is another example of the SBCI supporting the Government in the delivery of vital relevant supports for businesses in Ireland.
The new EIF support for business investment in Ireland is backed by the European Fund for Strategic Investments.
Note to Editors
About the Future Growth Loan Scheme
The Future Growth Loan Scheme, which was announced in the 2019 budget will provide affordable financing to Irish businesses and the primary agriculture and seafood sectors to support strategic long-term investment in a post Brexit environment. The Scheme, which will be delivered by the Strategic Banking Corporation of Ireland (SBCI) through commercial lenders will make €300 million available to eligible businesses with up to 249 employees at an interest rate of 4.5% or less for loans up to €249,999 and 3.5% and less for loans greater than or equal to €250,000.
The Future Growth Loan Scheme will feature a two-stage application process. Applications for eligibility under the scheme will be made through the SBCI website. The SBCI will assess the applications and those successful will be issued an eligibility reference number.
Eligible businesses will then be able to apply for a loan under the scheme with one of the participating finance providers using the eligibility reference number. Approval of loans are subject to the finance providers’ own credit policies and procedures.
- Loan amount from €100,000 (€50,000 for primary agriculture) up to a maximum of €3,000,000
- Loan term from a minimum of 8 years to a maximum of 10 years
- Loans less than €500,000 will be unsecured
- Interest rate of 4.5% for loans up to €249,999 and 3.5% and less for loans greater than or equal to €250,000.
Loans can be used for:
- Investment in tangible or intangible assets for the purpose of process and organisational innovation.
- Investment in tangible and intangible assets on agricultural holdings linked to primary agricultural production.
This Scheme is supported by an agreement with the EIF, and SBCI have signed to support lending toward small and medium-sized enterprises (SMEs) as well as small Mid-caps. This agreement allows SBCI to provide guarantees to lenders financing companies in Ireland for a total of €300 million over the next three years with the support of a counter-guarantee provided by the EIF.
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. More information on EIF's work under EFSI is available here.
About the Strategic Banking Corporation of Ireland (SBCI)
As Ireland’s promotional financial institution, the SBCI’s goal is to ensure access to lower cost longer term funding for Irish SMEs by facilitating the provision of:
- Lower cost funding to finance providers, the benefit of which is passed on to SMEs and which enhances competition in the SME lending market
- Risk-sharing and guarantees that enhance access to finance for SMEs and farmers and that address specific market failures
- Sourcing and delivering EU funding.
All of these elements create a more competitive and dynamic environment for SME finance. The SBCI is a vital part of the country’s financial architecture. By taking a fresh approach to providing access to lower cost finance for SMEs in Ireland, the SBCI is actively supporting the long-term potential of the sector to drive economic growth and create jobs.
About the Juncker Plan
The Investment Plan for Europe, the so-called "Juncker Plan", is one of the European Commission's top priorities. It focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.
The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. The EFSI is already showing concrete results. The projects and agreements approved for financing under the EFSI so far are expected to mobilise more than €194 billion in investments and support over 426,000 SMEs across all 28 Member States.