State unlocks €500m SME lending scheme after striking deal with European Investment Fund

The Government has made €500m in funds available as part of a new long-term small business lending scheme after signing an agreement with the European Investment Fund.

he Growth and Sustainability Loan Scheme will provide discounted loans of up to €3m to SMEs, including farmers, for business expansion and investment in energy efficiency and sustainability.

The fund, which is being pitched as a successor to the successful Future Growth Loan Scheme, offers finance for up to 10 years with unsecured loans of up to €500,000 – terms difficult to get from non-state lenders.

At least 30pc of the loans will be targeted at spending in support of the climate change agenda, according to the Department of Enterprise.

Low-cost funding will be underpinned by the European Investment Bank and the scheme will be run via the Strategic Banking Corporation of Ireland (SBCI) and its commercial lending partners.

“The Growth and Sustainability Loan Scheme will enable businesses to invest in sustainability, innovation and further expansion through longer-term investments, using low-cost, longer-term and more accessible funding,” said SBCI chief executive June Butler.

The new funding source is being pushed to farmers, fishers and businesses for strategic investment.

“I am committed to ensuring that the agri-food sector has appropriate access to finance, especially in achieving the objectives of Food Vision 2030, our shared ten-year strategy for the Irish agri-food sector, in order to ensure that our economic and environmental objectives can be achieved in the time ahead,” said FF Agriculture Minister Charlie McConalogue TD.

The SBCI was very active as a source of funding to business during the Covid crisis, recording its biggest years for lending during the pandemic.

The state lender massively extended its lending capacity in 2020 and 2021 with cumulative funding commitments approaching €3.5bn in 2021, up from almost €1.8bn in 2019.

The popular Future Growth Loan Scheme, which had very enthusiastic take-up among small business, was extended by €500m in 2020, but it is now at capacity.

The SBCI has relationships with more than 30 commercial lenders, including the main retail banks, several credit unions, asset-backed financers and crowdfunding company Linked Finance.