Brexit loan scheme for SMEs

Brexit Loan Scheme for SMEs - Crowe Ireland

The Strategic Banking Corporation of Ireland (SBCI) was set up with the primary purpose of proactively supporting Irish SMEs with access to flexible finance for their businesses.

Brian Colgan from the SBCI recently joined one of our Pinnacle Programme sessions to outline the specific support that is available to SME business owners to fund innovation, change or adaptation of the business to mitigate the impact of Brexit. Below is some detail on the scheme.

The SBCI Brexit Loan Scheme is offered in partnership with the Department of Business Enterprise and Innovation, the Department of Agriculture Food and the Marine and is supported by the InnovFin SME Guarantee Facility, with the financial backing of the European Union under Horizon 2020 Financial Instruments.

The loans are available through AIB, Bank of Ireland and Ulster Bank. Approval of loans are subject to the banks own credit policies and procedures.

Loan features

  • Loan amounts of between €25,000 to €1.5m per eligible enterprise (see the State Aid section below for further details)
  • Maximum interest rate of 4%
  • Loan terms ranging from 1 year to 3 years
  • Unsecured loans up to €500,000
  • Optional interest-only repayments may be available at the start of the loans
  • The loan amount and term is dependent on the loan purpose

Loans can be used for

  • Future working capital requirements
  • To fund innovation, change or adaptation of the business to mitigate the impact of Brexit

Loans cannot be used for

  • Refinance of undertakings in financial difficulties
  • Refinance of existing debt (e.g. Terms Loans/Leases/Hire Purchase etc.)

Who can apply

Viable micro, small and medium sized enterprises (SMEs) and Small MidCap enterprises that meet the eligibility criteria

SMEs are defined by the Standard EU definition [Commission Regulation 2003/361/EC] as enterprises that:

  • Have fewer than 250 employees
  • Have a turnover of €50 million or less (or €43 million or less on their balance sheet)
  • Are independent and autonomous i.e. not part of a wider group of enterprises
  • Have less than 25% of their capital held by public bodies
  • Is established and operating in the Republic of Ireland

A Small Mid-Cap is an enterprise that is not an SME but has fewer than 500 employees

Who cannot apply

SMEs/ Small Mid-Cap that:

  • Are involved in the primary agriculture and/or aquaculture sector
  • Are in financial difficulty (excluding cashflow pressures caused by Brexit impact)
  • Are bankrupt or being wound up or having its affairs administered by courts
  • In the last 5 years has entered in to an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts
  • Are convicted of an offense concerning professional misconduct by judgement, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity where such illegal activity is detrimental to the European Union’s financial interests

Eligibility criteria

There is a range of criteria which applicants must meet. This is available to view on the SBCI website.

As part of the eligibility application form an up to date business plan will be required to be provided to bank(s) plus a range of documents as laid out in the eligibility criteria.

State Aid

Loans in this Scheme are subject to the De Minimis state aid threshold of €200,000 per undertaking received in the last three-year fiscal period – i.e. the current year and the previous two years. If an enterprise has received state aid during this period it may not be able to avail of the maximum loan amount of €1,500,000 but may be able to avail of a lower loan level. For example, if an undertaking has received a grant of €160,000 during the preceding three-year fiscal period and then applies for a 3-year loan of €700,000 under the Scheme, it would incur an amount of €44,800 of state aid thereby exceeding the €200,000 state aid threshold. Options for the undertaking would be to reduce either the amount or the term of the loan being sought. To identify the amount of state aid incurred for each loan amount and term, see the State Aid Matrix here.

State Aid is defined as any aid granted by a member state or through state resources (any state body, agency or department). State Aid incurred is not equal to the amount of the loans.

State Aid (See Regulation for further details)

How to apply for a loan?

  1. The SME/ Small Mid-Cap must first complete the Eligibility Application Form to check if they are eligible to apply to the bank(s) for a loan under the Scheme.
  2. If an SME/ Small Mid-Cap is eligible they will receive a letter of confirmation from the SBCI which they then present to the bank(s), as part of the credit application process.

When are the SBCI Brexit Loans available

  • Applications for loan eligibility can be made from 28 March 2018
  • Loan applications can be made to the financial providers from 3 April 2018
  • The Scheme operates from March 2018 to March 2020 or until the scheme has been fully subscribed

Where to apply for a loan?

The following Banks will be offering SBCI Brexit Loans:

  • AIB
  • Bank of Ireland
  • Ulster Bank

For more detail and to apply visit the SBCI website. If you would like support in applying for the SBCI loan scheme or on any aspect of raising finance for your business contact a member of our corporate finance team.