Covid-19 Business Support

ByLalor And Company

The Covid-19 global pandemic is presenting huge challenges for businesses across Ireland. Several debt funding schemes have been announced by the Government in order to support Irish businesses during the pandemic. If you require additional assistance please feel free for contact us. The consultation will be free of charge.

What business support schemes are available during the Covid-19 pandemic?

Four of the key business support schemes are:

  • SBCI COVID-19 Working Capital Scheme

  • Microfinance Ireland COVID-19 Business Loan

  • SBCI Credit Guarantee Scheme

  • Enterprise Ireland Business Response – COVID-19

SBCI COVID-19 Working Capital Scheme

What is it SBCI COVID-19 Working Capital Scheme?

The Strategic Banking Corporation of Ireland (“SBCI”) COVID-19 Working Capital Scheme is offering:

  • Loan terms ranging from 1 year to 3 years

  • Loan amounts of between €25,000 to €1.5m per eligible enterprise

  • Loans unsecured up to €500,000

  • A maximum interest rate of 4%

  • The loan amount and term are dependent on the loan purpose

  • Optional interest-only repayments may be available at the start of the loan.

The loans can be used to fund future working capital requirements and can be used to fund innovation, change or adaptation in order to mitigate the impact of COVID-19.

Is my business eligible for SBCI COVID-19 Working Capital Scheme?

To qualify for this business support  scheme, your business turnover or profitability must be negatively impacted by a minimum of 15% directly due to COVID-19. Your business must also:

  • Be an eligible micro or small and medium enterprise or small mid-cap business

  • have fewer than 250 employees

  • have a turnover of €50 million or less (or €43 million or less on your balance sheet)

  • be independent (it is cannot be part of a wider group company)

  • have less than 25% of their capital held by public bodies

  • be operating in the Republic of Ireland

  • meet one of 11 innovation criteria. Further details are contained here

Can an my business use the SBCI loan to refinance existing debt?

In short, no. The loan cannot be used to refinance existing debt (e.g. leases, term loans etc.). Companies with pre-existing financial difficulties and pre-existing cash-flow pressures will not be eligible.

Where do we apply for the SBCI COVID-19 Working Capital Scheme?

The loans will be available through AIB, Bank of Ireland and Ulster Bank.

  • You will need to first complete the Eligibility Application Form to check if you are eligible to apply to Bank of Ireland, AIB or Ulster Bank for a loan under the Scheme.

  • If so, you will receive a letter of confirmation from the SBCI which will be required as part of the credit application process in the bank.

  • The loan approval process will be subject to each bank’s own credit policies and procedures.

  • Please note that an up to date business plan will be required to be provided to the finance provider(s) in all cases when applying for a loan.

Microfinance Ireland COVID-19 Business Loan

What is it the Microfinance Ireland COVID-19 Business Loan?

The COVID-19 Business Loan from Microfinance Ireland aims to support “microenterprises” who are negatively impacted by Covid-19. It is a government initiative and the main features are: 

  • Business loans available from €5,000 to €50,000;

  • Loan terms up to a maximum of 3 years;

  • Six months interest free and repayment free moratorium, with the loan to then be repaid over the remaining 30 months of the 36-month loan period;

  • Loans may be used for working capital and required business changes as a result of COVID 19;

  • Interest rate of 4.5% if submitted through Local Enterprise Office or referred by borrower’s Bank and 5.5% if an application is made directly with Microfinance Ireland; and

  • Fixed repayments with no penalty for early repayment

Is my business eligible for the Microfinance Ireland COVID-19 Business Loan?

To be eligible, your business must:

  1. Qualify as a microenterprise (see below for more detail)

  2. Have a negative impact of at least 15% on the business (of actual or projected in turnover or profit); and

  3. Must not be in a position to avail of bank finance.

To qualify as a “microenterprise”, the business can be a sole trader, partnership or limited company and it must have:

  • Fewer than 10 full-time employees;

  • Less than €2m annual turnover; and

  • A Balance Sheet with Net Assets that don’t exceed €2m.

How do we apply for the Microfinance Ireland COVID-19 Business Loan?

Further details are available from Microfinance Ireland or your local enterprise office.

SBCI Credit Guarantee Scheme

What is it SBCI Credit Guarantee Scheme?

The Credit Guarantee Scheme aims to assist SME’s which are unable to access credit (under normal lending criteria). It operates by providing 80% guarantee on qualifying loans. It is provided by Strategic Banking Corporation of Ireland (SBCI) and the main features are:

  • Up to 80% guarantee is provided on facilities ranging €10,000 to €1,000,000 (the facilities include term Loans, demand loans and performance bonds).

  • Terms of up to 7 years

  • The interest rate charged on the loan will be the bank’s market SME lending rates.

  • You pay a premium which partially covers the cost of providing the guarantee. The premium can vary but is currently 0.5%.

Is my business eligible for the SBCI Credit Guarantee Scheme?

If your business is a SME (sole trader, partnership, franchise, co-operative or limited company) and meets the following criteria, it may be eligible: 

  • It is involved in a commercial activity and has as a viable business proposal;

  • It is able to repay the facility; and

  • Is unable to access credit under normal lending criteria (e.g. due to insufficient collateral or a new business market (which is perceived as higher risk); or

Can my business use the scheme to refinance existing debt?

The scheme cannot be used to refinance existing debt alone. However, in cases where new lending is sought along with refinancing, the availability of a guarantee in respect of the new lending element may help to secure an overall package of support to the business, including consolidation of existing debts.

Certain sectors are excluded from the scheme such as certain property related activities and agriculture.

How do we apply for the SBCI Credit Guarantee Scheme?

Currently, Ulster Bank, Bank of Ireland and AIB are participating in the Scheme. The lenders makes the ultimate decision in relation to lending. Further details are available from SBCI.

Enterprise Ireland Business Response – COVID-19

What is it Enterprise Ireland Business Response?

Enterprise Ireland has created a new €180m fund to help and support certain manufacturing and internationally traded service companies. It is known as the “Sustaining Enterprise Fund” and the main features are:

  • Funding up to €800,000 is available for each applicant;

  • The funding will be provided in the form of repayable advances or equity investments;

  • The funding is repayable (subject to achieving the project objectives);

  • An annual administration fee of 4% is charged;

  • There is a three-year grace period before advances begin being repaid; and

  • The total repayment is due by the end of year five (subject to achieving the project objective).

Is my business eligible for the Enterprise Ireland Business Response?

Your business may be eligible if:

  1. It operates in the manufacturing or internationally traded services sectors;

  2. Your business turnover or profitability has been negatively impacted by a minimum of 15% directly due to COVID-19 (this can be due a significant increase in costs);

  3. It employs 10 or more full-time employees;

  4. Has been unable to raise sufficient funding from the market or appropriate financial institution or if appropriate (SCBI).

My business was in financial difficulty late last year, can I still apply?

There are certain limitations to the scheme. If your business was in financial difficulty on 31 December 2019, it may not be eligible. Other limitations also apply – for example if you are in the agricultural sector.

How does my business apply?

You will need to apply to Enterprise Ireland with a Business Sustainment Plan. The plan should outline your immediate liquidity difficulties and should highlight how financial support will help to support your business through this period. You should include:

  • Evidence of a drop of 15% or more (or projected) in income arising from the COVID-19.

  • Evidence of your application for funding through the SBCI or financial institutions.

  • Evidence of the need for COVID-19 support funding.

  • Identification of the sources of additional funding required to fully implement the business project plan;

  • The Business Sustainment Plan should detail your business project plan (which if fully implemented, will enable the company to be financially viable).

You can apply to Enterprise Ireland through your existing Development Advisor or through the COVID-19 Business Response Unit at businessresponse@enterprise-ireland.com.

How can Lalor & Company provide help you?    

With over 30 years’ experience advising on liquidity, cash flow and debt issues, we are well placed to advise you on the best options available. We have extensive experience dealing with banks and other credit institutions and can help navigate your business through these challenging times.

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