COVID-19 Credit Guarantee Scheme

The COVID-19 Credit Guarantee Scheme Term Loan is closed to new applications.

The COVID-19 Credit Guarantee Scheme Term Loan is a variable rate loan for businesses who have been impacted by COVID-19.

The Scheme is made available by the Department of Business, Enterprise and Innovation and operated by the Strategic Banking Corporation of Ireland (SBCI), further details can be found on the SBCI Website.

Key features

Loans offered under the Scheme are for terms of between one and five and a half years.
A Guarantee for a percentage of the loan is provided for facilities from €10,000 to €1 million. The aggregate of all facilities granted to a particular qualifying/participating enterprise may not exceed €1 million.
The Scheme is aimed to help businesses that have experienced an adverse impact of a minimum of 15% in actual or projected turnover or profit, due to the impact of COVID-19.
Eligible purposes under the Scheme include:
- Working Capital;
- Investment
- Refinance of existing COVID-19 related debt;
  - Refinance of non-COVID-19 related debt is not permitted under the Scheme
No security will be required for loans up to €250,000.
The interest rate on this loan is the SBCI Variable Interest Rate plus:
- a maximum margin of 2.75% on loans.
·A CGS Loan of €25,000 over 5 years at 2.75% will have 60 monthly repayments of €446.17. The total cost of credit is €1,770.06, total amount repayable for the loan is €26,770.06.

This cost of credit example does not include the premium you will be required to pay for participating in the Scheme

What else you should know

A Premium payment is to be made to participate in the Scheme. This Premium is payable to the Minister for Business, Enterprise and Innovation and is collected by AIB on behalf of the Minister. More information on the Premium is available below.
The provision of the Scheme Guarantee does not remove any liability for the credit from the Customer.
As part of your application, you will need to submit your business’s audited/certified accounts and if not available then, your business’s latest management accounts or in certain exceptional cases, your business’s relevant business current account statements.
The amount you can borrow is based on:
- 25% of your total 2019 business turnover; or
- Double your annual wage bill.

In exceptional cases you can request to borrow an amount that is greater than the above criteria. In these exceptional cases a copy of the Business Current Account Statements can be accepted if you are a Micro Enterprise or Primary Producer. (definitions available under ‘who can apply’.)

If so please you can talk to our Specialist Team on 0818 227 058.

Government Credit Guarantee Scheme At a Glance

SBCI Variable Interest Rate plus a maximum margin of 2.75%
Loan amounts from €10,000-€1,000,000
Terms from 1 up to 5 and a half years

COVID-19 Credit Guarantee Scheme Premium

As Facilities under the COVID-19 Credit Guarantee Scheme benefits from a guarantee, you will need to pay a Premium on the Facility. The Premium is collected by AIB on behalf of the Minister for Business, Enterprise and Innovation.

The Premium will be charged in line with the facility repayments and must be paid when it falls due. Non-payment of the Premium can result in a customer being deemed in default of the loan.

Without limiting any of our rights, if a customer fails to make a payment of Premium when it is due, we may, at our discretion demand early repayment of the Facility in full.

The Premium charged is based on the term of the facility and whether the customer is a Small or Medium Enterprise (SME) or a Small Mid Cap Enterprise.

The following table outlines the Premium applicable to loans of different terms. The amount of the Premium differs if you are an SME or a Small Mid-cap.

SME
Term of Facility (Years)	Premium (per year)
Longer than 5 years	0.68%
Equal to or shorter than 5 years but longer than 4 years	0.61%
Equal to or shorter than 4 years but longer than 3 years	0.50%
Equal to or shorter than 3 years but longer than 2 years	0.29%
Equal to or shorter than 2 years but longer than 1 year	0.26%
Up to and including 1 year	0.15%

Small Mid-cap
Term of Facility (Years)	Premium (per year)
Longer than 5 years	1.55%
Equal to or shorter than 5 years but longer than 4 years	1.40%
Equal to or shorter than 4 years but longer than 3 years	1.19%
Equal to or shorter than 3 years but longer than 2 years	0.73%
Equal to or shorter than 2 years but longer than 1 year	0.63%
Up to and including 1 year	0.30%

The Premium payable on the Outstanding Balance of the Facility will be calculated in accordance with the table above.

The Premium on the Outstanding Balance will be payable on each of the dates that repayment instalments of the Facility are due to be made.

The amount of Premium payable will be calculated by us 7 days before the first repayment instalment of the Facility is due to be made and thereafter, calculated no later than 4 days before each subsequent repayment of the Facility. The calculation of the Premium will be based on the aggregate of:

A. the Outstanding Balance on the Facility on the date the calculation is made, multiplied by
B. the annual premium rate referenced in the table above which is relevant to the Facility, divided by the chosen frequency of the repayment (i.e. for a monthly repayment, divided by 12). An example of how the Premium is applied is set out below:

Examples
A loan to an SME customer of €25,000 over 5 years will have a Premium of 0.61% applied. The total cost of this Premium over the life of the loan will be €395.39.
A loan to a Small Mid-Cap customer of €25,000 over 5 years will have a Premium of 1.40% applied. The total cost of this Premium over the life of the loan will be €907.45

Repayment Options

Under the Scheme, you can make standard Capital and Interest Repayment or you can avail of a Capital and Interest Moratorium or an Interest only repayment period up to 12 months at the start of your loan.

Interest Only period followed by Capital & Interest repayments

This is a period at the start of the loan where you only pay the interest charged on your loan. Please note your standard Capital and Interest repayments will be higher as a result of this when the interest only period ends. If you avail of an Interest Only period at the start of your loan, your total cost of credit will be higher as a result.

For example a CGS Loan of €25,000 over 5 years at 2.75% with an interest only period will have 12 monthly repayments of €57.20 followed by 48 monthly repayments of €550.57. The total cost of credit is €2,113.76, total amount repayable for the loan is €27,113.76*

Moratorium followed by Capital & Interest repayments

A moratorium means that you won’t pay any interest or capital on your loan during the period of the break. When the moratorium ends your repayments over the term of your loan will be higher as a result. If you avail of a moratorium period during your loan, your total cost of credit will be higher due to this.

For example a CGS Loan of €25,000 over 5 years at 2.75% with a 3 month payment break will have 57 monthly repayments of €471.56. The total cost of credit is €1,878.92, total amount repayable for the loan is €26,878.92*

These cost of credit examples do not include the premium you will be required to pay for participating in the Scheme

Useful information about eligibility for The COVID 19 Credit Guarantee Scheme Term loan

Who can apply?
To apply for a COVID 19 Credit Guarantee Scheme loan you must be a viable micro enterprise, small or medium sized enterprise (SME), Small Mid-cap enterprises or Primary Producer.

A Micro Enterprise is defined as an entity which:
- has fewer than 10 employees
- has a turnover and/or balance sheet of €2 million or less
An SME is defined by the Standard EU definition [Commission Regulation 2003/361/EC] as an enterprise that:
- has fewer than 250 employees
- has a turnover of €50 million or less (or €43 million or less on their balance sheet)
- is independent and autonomous i.e. not part of a wider group of enterprises
- has less than 25% of their capital held by public bodies
- is established and operating in the Republic of Ireland
A Small Mid-cap is an enterprise that is not an SME but has fewer than 500 employees.

A Primary Producer is: A person who is engaged in primary production which is the production, rearing or growing of primary products including harvesting, milking and farmed animal production prior to slaughter. It also includes hunting and fishing and the harvesting of wild products.
Under Scheme rules customers in the following Sectors are ineligible for the Scheme and cannot apply
1. Mining and Quarrying
- Extraction of crude petroleum
- Extraction of natural gas
- Support activities for petroleum and natural gas extraction
2. Manufacturing, including manufacturing businesses who:
- Manufacture of tobacco products
- Manufacture of weapons and ammunition
- Manufacture of military fighting vehicles
3. Construction, including:
- Construction of buildings
- Construction of residential and non-residential building
4. Real Estate Activities, including:
- Buying and selling of own real estate
5. Arts, Entertainment and Recreation, including:
- Gambling and betting activities
6. Financial and Insurance Activities, including:
- Monetary intermediation
State aid

The COVID 19 Credit Guarantee Scheme is provided subject to and in accordance with EU state aid law, including the Temporary Framework for state aid measures to support the economy in the current COVID-19 outbreak ((C(2020)1863), as adopted by the European Commission on 19 March 2020 and as amended on 3 April 2020 (C(2020) 2215), 8 May 2020 (C(2020) 3156) and 29 June 2020 (C(2020) 4509) and as may be further amended from time to time), and in particular section 3.2 thereof.
Who Cannot Apply:
- Customers in financial difficulty, (as defined with the meaning of Annex 1 of the Commission Regulation (EC) No 702/2014 (as amended from time to time) and currently available at here), as at 31^st December 2019
- Customers seeking to refinance existing debt not impacted by COVID 19 e.g.:
  - Refinance of an existing loan to avail of cheaper rate
  - Roll up of existing facilities onto one loan under the scheme.
  - Refinance of long term overdraft, in debit pre COVID 19
- are an undertaking in difficulty;
- operate in one or more Excluded Sectors above
- are delinquent or in default under any agreement with AIB or another financial institution;
- are bankrupt or being wound up or having its affairs administered by the courts
- in the last five years have entered into an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts
In derogation to the foregoing, aid can be granted to Micro or Small enterprises (within the meaning of Annex I of the General Block Exemption Regulation) that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency procedure under national law, and that they have not received rescue aid or restructuring aid.
How to apply
Step 1 - Firstly, review the rules of the Covid-19 Credit Guarantee Scheme which are set out on the Department of Business, Enterprise and Innovation website.

Step 2 -
- If you’re not impacted by Covid-19 or you have a Relationship Manager, contact your Branch or Relationship Manager to discuss options available to you and apply.

It is important to note that a credit application must be processed in the normal way first and assessed under its own merits before eligibility for the scheme is considered.

Other resources

Helpful Guide to Applying for Business Finance

T&C’s Governing Business Lending

Important / Regulatory Information

Lending Criteria, terms and conditions apply. Credit facilities are subject to repayment capacity and financial status and are not available to persons under 18 years of age. Security may be required.

COVID-19 Credit Guarantee Scheme – Term Loan