Up to 1,250 Irish businesses have been “recommended” for State-backed coronavirus loans, according to a senior official at the Department of Enterprise, Trade and Employment.

Declan Hughes, head of the department's indigenous enterprise, SMEs and entrepreneurship division, said that as of last Friday banks operating the Government's Covid-19 credit guarantee scheme had recommended 1,250 loans worth €64 million.

Mr Hughes told the Oireachtas Committee for Enterprise, Trade and Employment that there had been "very significant interest" in the initiative.

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The €2 billion scheme, announced as part of the Government’s July stimulus package, provides low-cost loans to businesses impacted by the pandemic with up to 80 per cent guaranteed by the State.

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The loans can be used to fund working capital including liquidity needs, investment in innovation, or to refinance debt incurred as a result of Covid-19, and is the largest loan scheme ever announced by the State.

However, Sinn Féin’s Louise O’Reilly claimed the scheme had been announced quite late in comparison with other countries and that the take-up had been extremely low with only 128 loans worth €6 million approved.

Mr Hughes admitted the amount drawn down to date has been low but that he expected to see that increase significantly on the basis of the applications being recommended and processed.

“In terms of the numbers that are going through the credit application process, it was 850 the previous Friday, it was up to 1,250 last week, so that’s nearly a 50 per cent increase in those that are being processed through the banks,” he said.

There is often a lag between securing the loan facility and actually drawing it down, he said, while noting that some firms may be reluctant to take on debt.

The committee scheduled a meeting with department officials to discuss the efficacy of various business supports.

Mr Hughes said the Government’s Trading Online Voucher scheme, which allows small businesses claim up to €5,000 to develop their ecommerce capability, has seen 9,000 applications.

Fine Gael's Richard Bruton said there was a need to legislate for "a lighter form of examinership rather than the very expensive High Court approach" with so many enterprises likely to need some form of restructuring as a result of the pandemic.

Mr Hughes said the Government was aware of the costliness of the process and was examining a more

Pauline Mulligan, head of corporate services at the department, laid out the department's funding for various business supports.

“Our gross allocation for 2021 is €1.127 billion, made up of €359.5 million in current and €768 million in capital,” she said, noting that this was an increase of 16 per cent on its original budget allocation.

With a further €900 million approved under the Revised Estimate approved by the Dáil in June provided, “this more than doubling of our original 2020 allocation allowed us to provide immediate targeted supports to enterprises impacted by Covid through measures such as the restart grant,” she said.