The Strategic Banking Corporation of Ireland (“SBCI”) COVID-19 Working Capital Scheme (the “Scheme”) is a €450m working capital scheme which is offered by the SBCI in partnership with the Department of Business Enterprise and Innovation, the Department of Agriculture Food and the Marine and is supported by the InnovFin SME Guarantee Facility, with the financial backing of the European Union under Horizon 2020 Financial Instruments.

Loans under the Scheme are available through AIB, Bank of Ireland and Ulster Bank. The Scheme provides competitively priced, flexible funding to businesses impacted by COVID-19, with the Scheme operating from 26th March 2020 until 31st March 2021 or until the Scheme has been fully subscribed.

Key Features of the Loans

  • Each loan will be subject to a maximum interest rate of 4%
  • Loan terms from 1 year to a maximum of 3 years, including any requirement to restructure
  • Loans are available for amounts from €25,000 up to a maximum of €1,500,000 per eligible enterprise
  • No security will be required for loans up to €500,000
  • An interest only repayment option may be available at the start of a loan
  • The loan amount and the term is dependent on the loan purpose
  • Loans can be used to:
  1. Fund working capital requirements, and;
  2. Fund innovation, change or adaption of the business to mitigate the impact of Brexit or COVID-19
  • Loans cannot be used to:
  1. Refinance undertakings in financial difficulties
  2. Refinance of existing debt (e.g. Terms Loans/Leases/Hire Purchase etc.).

Who can apply for a Loan?

Viable micro, small and medium sized enterprises (“SMEs”) and Small Mid-Cap enterprises that meet the eligibility criteria.

SMEs are defined by the Standard EU definition [Commission Regulation 2003/361/EC] as enterprises that:

  • have fewer than 250 employees
  • have a turnover of €50m or less (or €43m or less on their balance sheet)
  • are independent and autonomous i.e. not part of a wider group of enterprises
  • have 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.

Who cannot apply for a Loan?

SMEs / Small Mid-Cap enterprises that:

  • are in financial difficulty (excluding cashflow pressures caused by the impact of COVID-19);
  • as a substantial focus on primary agriculture and or aquaculture sectors;
    are bankrupt or being wound up or having its affairs administered by the courts;
  • in the last 5 years has entered into an arrangement with creditors, in the context of being bankrupt or wound-up or having its affairs administered by the courts; and
  • are convicted of an offense concerning professional misconduct by judgement, fraud, corruption, involvement in a criminal organisation, money laundering or any other illegal activity where such illegal activity is detrimental to the European Union’s financial interests.

Eligibility Criteria

In order to be eligible for a loan, SMEs/Small Mid-Cap enterprises must:

  1. be impacted by the COVID-19 virus resulting in business turnover/profitability being negatively impacted by a minimum of 15%; and
  2. satisfy one of the eleven Innovation Criteria, which include (i) using 80% of the loan on research and innovation activities associated with your response to COVID-19, (ii) entering a new product or geographical market, (iii) having been awarded a Research and Development or Innovation prize by an EU Institution or EU Body over the last 24 months or (iv) being an early stage SME and have received an investment over the last 24 months from a venture capital investor or business angel.A full list of the Innovation Criteria can be found on the SBCI website, which also details the evidence required from the applicant in order to prove that the Eligibility Criteria have been satisfied.

State Aid

The SBCI, which is a state body, provides support for the Scheme which allows a reduced interest rate to be applied. In some cases, this reduction in interest rate may be classified as State Aid.

Loan amounts and term available to an applicant are dependent upon State Aid thresholds (eg for SMEs, State Aid must not exceed €200,000 in any 3-year fiscal period). Borrowing under this Scheme will give rise to State Aid benefit, and therefore there may be a restriction on the loan amount/loan term that can be availed of by the borrower. It is important to note that the State Aid is not the amount of the loan.

Further details and explanation on State Aid can be found on the SBCI Website. The SBCI website also contains a State Aid Matrix which can be used by an applicant in order to identify the amount of State Aid incurred in connection with each loan amount and term.

How to apply for a loan?

The SME / Small Mid-Cap enterprise must first complete the Eligibility Application Form on the SBCI Website to check if they are eligible to apply to the bank(s) for a loan under the Scheme.

If an SME / Small Mid-Cap enterprise is eligible they will receive a letter of confirmation from the SBCI which they then present to the bank(s), as part of the credit application process.

Erc Walsh

Erc Walsh

Partner, Finance
Dublin, Ireland

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