SMEs struggling to access Covid-19 loans and supports

Sunday Independent investigation reveals widespread issues with SBCI loans

SMALL businesses are finding it close to impossible to access the State’s Covid-19 loan scheme, according to sources within the business community.

The Sunday Independent spoke with several Irish businesses and advisers, who shared concerns over the State’s Strategic Banking Corporation of Ireland (SBCI) scheme. Issues included long processing times for applications, the process being complicated, banks changing repayment terms, companies being rejected, and some being told the scheme was fully allocated.

One source said he had heard of companies experiencing long waiting times and then being told by banks that the SBCI fund was fully allocated. He shared an email in which a company sought a Covid-19 loan from AIB, understood to be the SBCI Covid-19 Working Capital Loan Scheme. In response, AIB told the company its SBCI fund was fully allocated, but it is still accepting some applications in case more funding is made available.

AIB confirmed to the Sunday Independent that the Working Capital Loan Scheme was not fully allocated at the time. An AIB spokesman offered to resolve issues the customer had faced. “AIB’s main priority through the Covid-19 crisis has been to support our customers and Ireland’s economic recovery. Our SBCI Covid-19 Working Capital Loan Scheme has remained open for our customers to apply for their working capital needs since March.

“For a period AIB’s Future Growth Loan Scheme was fully subscribed as customer applications exceeded our allocation. Following some customer applications not proceeding, it has since opened for applications again.” The bank added it could not comment on individual customer cases.

Another source said she was aware of this issue and had heard of similar problems affecting companies seeking a Covid-19 loan. She claimed companies were having repayment terms changed by banks, creating uncertainty, but said she had heard fairly positive feedback about SBCI.

A separate industry source spoke of how, out of 25 businesses he knew of that were interested in the scheme, none had been approved for a loan. The source pointed to Government figures showing that out of 3,241 applications, of which 2,921 were deemed eligible, only 584 had loans sanctioned. The value of these loan approvals was just over €69m, well below the €250m fund size.

A source in the banking sector said the innovation requirement in the loan scheme might be making it difficult for companies to access the loan. He claimed the SBCI had told banks it might remove the requirement in future.

A spokesman for Bank of Ireland said it was working with the SBCI and Government to facilitate the new Covid-19 Credit Guarantee Scheme, which it said needed to be prioritised as a “matter of national urgency”. It added the scheme had to be constructed in a simple way for customers, as it had been in other markets.

Ulster Bank said supporting its business customers was its priority. It added that Ulster Bank was “talking to our business customers every day”.

SBCI said, based on feedback, any time lag between approval and drawdown is largely driven by SMEs deciding on the precise nature of their financing requirements as they finalise their reopening plans.

It said it would be introducing features to make it easier for SMEs to apply, including simplifying the qualifying criteria, including innovation, and dropping the existing requirement for business plans.

The Department for Business Enterprise and Innovation said a €500m expansion to the Future Growth Loan Scheme was being developed. It had noted a high volume of interest, which might have delayed the processing of applications. It said banks had committed to continue to work with customers to ensure recovery can take place as “quickly as possible”.

It added there had been no changes to the terms of loans offered under the scheme since its launch.