Credit Guarantee Scheme

January 28, 2013

The Minister  for Jobs, Enterprise & Innovation, Richard Bruton has recently announced that Capita  Asset Services will operate the new Credit Guarantee Scheme.

The scheme aims to provide much needed credit to job-creating SME’s who currently struggle to get finance from the banks. It is intended to address market failure affecting commercially viable businesses in two specific situations:

  1. Where a business has insufficient collateral
  2. Where a business operates in a sector with which the bank is not familiar

The scheme aims to provide a 75% state guarantee to the bank against losses on qualifying loans to firms with growth and job creation potential. There will be a 2% premium charge to the government payable by the participating SME and the qualifying enterprise must not employ more than 250 employees. Initially the scheme will facilitate up to €150m of additional lending per annum to SME’s. The scheme is expected to benefit over 1,800 businesses.

Capita Assets Services which will operate the scheme is part of Capita Plc, a FTSE 100 company and are based in Maynooth Business Campus, County Kildare.

The individual loan transaction between the lender and borrower is delivered in an almost identical fashion to any other comparable commercial lending transaction between the parties, with the only difference being the supplementary arrangements necessary for payment of the premium.

Exclusions:

1.Primary Production in agriculture, horticulture and fisheries are excluded from the scope of the      scheme as the specific market failures mentioned above are not considered to apply to a significant extent in these sectors. The food and drinks sector will be eligible for the scheme.

2 Re financing of existing debts will be excluded as the purpose of this scheme is to facilitate additional lending into the economy. However in cases where new lending is being sought along with refinancing, the availability of the guarantee in respect of the new lending element should be of assistance in providing an overall package of support to the business including consolidation of existing debt.

3 Overdraft will be excluded from the scheme

4 Property related activities will be excluded from the scheme

 

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