Additional funding of €450m secured for SMEs

Additional funding of €450 million has been secured for small and medium sized enterprises (SME) by the Strategic Banking Corporation of Ireland (SBCI).

The SME-funding company said the extra cash would facilitate the “growing demand” for its loans and bring current funding capacity from its original €800 million to €1.25 billion.

The new funding is comprised of a €200 million long-term loan facility from the Council of Europe Development Bank in Paris and a €250 million 10-year guaranteed notes programme with the National Treasury Management Agency.

The SBCI said the funding would strengthen its ability to provide low-cost, flexible loans to Irish SMEs through its eight existing on-lending partners and its pipeline of new partners. It would also bring “additional diversification” to its sources of funding.

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SBCI chief executive Nick Ashmore said: "We succeeded earlier this year in committing all of the €800 million that was made available to us when we began operations two years ago.

“Our new funding arrangements will allow us to support even more SMEs and bring even greater competition to the SME lending market.

“We have demonstrated that we are an effective conduit for a range of EU supports to the Irish economy, which has enabled the SBCI to source further funding from international and domestic sources.”

In 2014, the SBCI sourced its initial funding of €800 million from German development bank KfW, the European Investment Bank, and the Ireland Strategic Investment Fund.

The SBCI has already committed €906 million in funding to its eight existing on-lending partners.

New on lenders

During 2016, the SBCI took on four new on lenders and, by September, had facilitated €458 million in loan drawdowns to over 11,500 SMEs throughout the Republic.

SBCI lenders offer loans across a range of products including working capital, investment, agri-finance, invoice finance, fleet finance and leasing. On average, SMEs receive a discount of 1.5 per cent on market rates for these loans.

Last week, funding of €100 million for SMEs was announced as part of a new agreement that sees the SBCI share credit risk with lenders for the first time.

The European Investment Fund and the SBCI signed the first Cosme agreement in the Republic. Cosme is a European Commission programme designed to ease access to finance for SMEs in Europe.

The transaction was guaranteed by the European Fund for Strategic Investments, which will allow the SBCI to support €100 million in loans to 2,000 SMEs through risk-sharing initiatives in the Republic over the next three years.