SBCI Interim Chief Executive Ian Black Explains COVID-19 Credit Guarantee Scheme
COVID-19 has impacted almost every part of our economy, with the hospitality sector amongst the most affected. In response, a number of measures have been put in place, one of which is the COVID-19 Credit Guarantee Scheme. Ian Black, Interim Chief Executive SBCI, explains below.
Repeated lockdowns, together with the current travel and trade restrictions have significantly impacted business turnover. As a result, ongoing fixed costs and accumulated debt, together with lower revenues and low cash reserves, are now a major concern for the sector.
Since the first lockdown in 2020, the Irish government has put in place a number of funding supports to assist the hospitality industry, ranging from grants to loan schemes. One of these supports is the €2 billion COVID-19 Credit Guarantee Scheme, which is operated by the Strategic Banking Corporation of Ireland (SBCI).
The Scheme was launched in September 2020 and has recently been extended up to the end of December.
The COVID-19 Credit Guarantee Scheme supports businesses which have or expect to have a reduction of minimum 15% in their turnover or profitability as a result of COVID-19 and are having difficulty in accessing credit to apply for low-cost funding that might not otherwise be available to them.
The Scheme covers facilities of between €10,000 and €1 million up to five and a half years, with facilities of up to €250,000 being unsecured thanks to an 80% government guarantee.
The COVID-19 Credit Guarantee Scheme also allows the refinance and rollover of certain finance agreements (e.g. COVID-19 related expenses that were initially funded through short-term or temporary facilities, such as overdrafts).
This Scheme is accessible through a wide range of lenders: banks, non-bank finance providers and 19 Credit Unions spread throughout the country.
A single-stage application process can be carried out directly through the Scheme's lenders. An updated list of Scheme providers is available on the SBCI website, www.sbci.gov.ie.
Since the Scheme's launch, more than €30 million has been already drawn down by businesses in the accommodation and food services sector, representing 14% of the total value drawn to date.
It is hoped that as the vaccination continues and restrictions begin to ease, freedom of movement will begin to return. However, it is likely that the recovery of the hospitality sector may take longer than in other sectors and vary across its segments (travel and tourism; hotels and B&Bs; pubs and restaurants; etc.).
What's certain is that the next normal will be marked by a change to the hospitality industry as we knew it, especially around the concept of customer and staff health and safety.
There is no one solution approach to address all of the concerns of the tourism sector. However, the provision of a support such as the COVID-19 Credit Guarantee Scheme allows the sector access to medium-term loans, at lower rates and the ability to refinance COVID-19 related debt over a longer period. This flexible Scheme should assist the hospitality industry as it begins to emerge from the current restrictions and reopen to customers and visitors.
In these difficult times, the SBCI stands behind its commitment to provide Irish businesses suitable funding support as an effective response to changing market conditions, new challenges and SMEs' financing needs.
For more information, visit www.sbci.gov.ie.
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