The new COVID-19 Credit Guarantee Scheme (CGS) will make low cost loans available to businesses impacted by the pandemic, providing much needed liquidity as our economy continues to reopen, according to the Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar.

The Government has agreed to publish the Credit Guarantee (Amendment) Bill 2020, which will underpin the scheme and will also remove the portfolio cap, which will result in an increased potential maximum liability for the State of €1.6 billion.

This Scheme will be the largest credit guarantee scheme for businesses in the history of the State. It will ensure that SMEs, primary producers and small Mid-Caps can access liquidity to keep their businesses operating, as our economy continues to reopen and more and more people get back to work. It will be available for a wide range of products including overdrafts, term loans and working capital.

The legislation is expected to go through the Oireachtas next week, allowing for its swift enactment. As with other credit guarantee schemes, the COVID-19 CGS will be operated by the Strategic Banking Corporation of Ireland and will be available through three banks; AIB, Bank of Ireland and Ulster Bank. There will be an Open Call in due course.

The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar T.D. stated “We want to help viable businesses to get through the difficult phase of reopening and deal with the new realities and challenges posed by COVID-19. The Credit Guarantee Scheme will provide low cost loans to businesses and will in turn help more people to get back to work.

“The changes being made to this Scheme will bring our offering into line with similar schemes across Europe. We want to give confidence to SMEs in particular, by providing the liquidity needed to get through the economic upheaval caused by the pandemic. This Scheme complements the other actions taken to date by Government, including direct grants to businesses, the warehousing of tax liabilities and commercial rates waivers. The July Stimulus Package will be the next step in our recovery plan as we seek to get businesses back on their feet and our people back to work.”

Legislative changes are needed to the existing Credit Guarantee Act 2012 (as amended) to put in place the extra measures for the COVID-19 Credit Guarantee Scheme. These changes allow the removal of the portfolio cap and also increase the size of the scheme to take account of the needs of business to respond to the economic challenges brought on by the COVID-19 pandemic.

The Tánaiste told RTÉ that the scheme will be “up and running” by no later than October. Saying that the scheme would be about “giving businesses access to loans on much better terms and conditions than they have now.”