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Big Brother is watching

Central Bank asked to watch the state fund for small businesses like a hawk

The Strategic Banking Corporation of Ireland launched the €400 million fund this morning.

THE IRISH SMALL and Medium Enterprises Association (ISME) have given their take on this morning’s launch of a €400 million loan fund for Irish SMEs.

While welcoming the fund’s launch, albeit stressing that a dedicated bank rather than a corporation “would have been preferable”, CEO Mark Fielding reiterated his association’s position that lending through the fund needs to be monitored to ensure SMEs benefit.

“The banks cannot be allowed to revert to past form similar to when they used the cheaper funds in the nineties to refinance larger businesses. Penalties for non-compliance should be enforced,” Fielding said.

This initiative could potentially be of great benefit to job and wealth creating Irish SMEs but only if the Government ensures that the bailed out banks stick to the rules.

ISME is recommending that the Central Bank be heavily involved in the monitoring of all loans made via the fund in order to keep the banks in check.

Specifically, they are suggesting any business granted a loan should be submitting monthly returns on the money lent to the Central Bank so as to keep them appraised of the kinds of loans that are being made.

The Strategic Banking Corporation of Ireland (SBCI) is launching the €400 million fund this morning.

The money will be available to businesses from 9 March.

“Irish SMEs have been paying more to borrow than similar businesses across Europe,” said SBCI chief executive Nick Ashmore in advance of the launch.

The SBCI products we are bringing to market are designed to address this in a simple and SME-friendly way.
This is just the start of the SBCI’s work in filling a major gap in addressing the needs of SMEs however.

Initial products offered will include working capital loans for up to €5 million with a duration of 10 years and loans for agricultural SMEs, with the loans initially managed by AIB and Bank of Ireland.

Gordon MRM Video Channel / YouTube

In tandem with the fund’s launch AIB confirmed this morning that the loans from the fund will operate at 4.5%, a cut of 2% on their standard variable business loan rate.

The fund will also provide loans with the specific purpose of refinancing facilities provided by banks who have exited the Irish market and thus left their debtors between a rock and a hard place.

The SBCI was initially launched last October.

While Irish SME bodies were cautiously positive about the new body, Sinn Féin’s finance spokesman Pearse Doherty poured scorn on the entity at the time:

The name gives the game away – we’ll have a banking corporation, not a bank. It won’t have a banking licence.
We need a State Bank that invests in the real economy.

Read: These are the startups Ireland’s newest business leaders have been coming up with

Read: Businesses beware: An invoice scam is defrauding Irish companies

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