Slow up­take of €300m Brexit loans

Irish Examiner - Farming - - FRONT PAGE - Stephen Cado­gan

Only €8.5m of a €300m Brexit loan scheme launched last March has been sanc­tioned.

In sharp con­trast, the €150m Agri­cul­ture Ca flow Sup­port Loan Scheme for farm­ers in 2017 was fully com­mit­ted af­ter one month. Min­is­ter for Busi­ness, En­ter­prise and In­no­va­tion Heather Humphreys re­vealed last week that only 224 Brexit loans had yet been approved by the Strate­gic Bank­ing Cor­po­ra­tion of Ireland (SBCI), and only 38 had pro­gressed to sanc­tion at bank level (to­talling €8.5m).

The sche ffers af­ford­able work­ing cap­i­tal for up to three years to el­i­gi­ble, Brexit-im­pacted com­pa­nies with up to 499 em­ploy­ees. Participating fi­nance providers are the Bank of Ireland, Ul­ster Bank and Al­lied Ir­ish Bank.

A year pre­vi­ously, more than 4,200 farm­ers availed of the €150m Agri­cul­ture Cash­flow Sup­port Loan Scheme (av­er­age loan of about €34,000). It ad­dressed the im­pact of ster­ling ex­change rate fluc­tu­a­tion aris­ing from Brexit, and of lower farm com­mod­ity prices in 2016. It of­fered work­ing cap­i­tal fund­ing at an in­ter­est rate of 2.95%. Up­take has been low of the €300m Brexit loan scheme (max­i­mum in­ter­est rate 4%), de­spite at least 40% of it be­ing ear­marked for food com­pa­nies. Only about 4% of ap­pli­ca­tions were un­suc­cess­ful.

In the Dáil, Ms Humphreys said: “Busi­nesses must con­sider care­fully whether they want to take up the of­fer of fi­nance. The Gov­ern­ment is pro­vid­ing an ar­ray of sup­ports to busi­nesses through De­part­ments and agen­cies, but ul­ti­mately busi­nesses have to de­cide them­selves whether they want to avail of the sup­ports.” She noted that the in­ter­est rate of 4% or less is at­trac­tive, bear­ing in mind that the in­ter­est rate for new busi­ness loans in Ireland was dou­ble the eu­ro­zone av­er­age rate through­out 2017.

The Gov­ern­ment will be hop­ing for a much bett re­sponse when it launches the Fu­ture Growth Loan Scheme in 2019. It was an­nounced in the re­cent bud­get as a loan fund of up to €300m avail­able to Ir­ish busi­nesses for terms of 8-10 years, in­clud­ing farm­ers, the seafood sec­tor and agri-food busi­nesses, to sup­port strate­gic, long-term in­vest­ment in a post­brexit en­vi­ron­ment.

Loans of up to €500,000 un­se­cured, with favourable terms for up to 10 years to sup­port cap­i­tal in­vest­ment, will be of­fered. Ms Humphreys said: “Cur­rently, the pil­lar banks will only lend for up to seven years.

“We will be pass­ing the leg­is­la­tion re­quired and launch­ing the scheme in early Jan­uary next year.” Agri­cul­ture Min­is­ter Michael Creed said €120m of the €300m will be avail­able as an agri-food pack­age. “How­ever, un­like previous sim­i­lar schemes, this can be re­viewed and ad­justed ac­cord­ing to de­mand. “This will be a long-awaited source of fi­nance for young and new en­trant farm­ers, es­pe­cially the co­hort who do not have high lev­els of se­cu­rity. “It will also serve smaller-scale farm­ers, who of­ten do not have the lever­age to ne­go­ti­ate for more favourable terms with their bank­ing in­sti­tu­tion.”

How­ever, the farm­ing or­gan­i­sa­tions have been crit­i­cal of the Fu­ture Growth Loan Scheme be­cause it is not avail­able for work­ing cap­i­tal.

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