Businesses cast doubt on government’s Covid-19 small business loan scheme

Businesses are casting doubt on whether a new credit guarantee scheme will help them out of the Covid-19 crisis.

The €2 billion programme, which must be approved by the Oireachtas next week, would give loans of between €10,000 and €1 million to companies with fewer than 500 employees who have been impacted by the virus.

Chief Executive of the Irish Small and Medium Enterprises Association, Neil McDonnell, says the loans have to be available at a low cost:

“Its affordability in the new iteration that’s promised will obviously depend on what the bank is lending this covered loan at. There’s no reason in our view why this should not be close to zero, that is what’s happening in other European states."

So if the banks are given this capital at a sufficiently low rate they should be able to lend it at a low rate.

80 per cent of the loans would be underwritten by the state for firms whose profits have been affected by the pandemic.

Earlier today, Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar defended the Government’s decision to take on this risk, saying it was important for the banks to “have some skin in the game.”

The programme will be the largest of its kind for businesses in the history of the State.