Loans to small businesses from State-run SBCI doubled this year

The value of loans drawn down by SMEs from the Strategic Banking Corporation of Ireland (SBCI) almost doubled in the first half of the year, according to a mid-year update from the state agency.

At the launch of its first annual report in Dublin on Thursday, the SBCI, which provides loans to small and medium-sized enterprises, said the level of drawdowns stood at €347 million at then end of June, up from €172 million in January.

Commenting on the figures, SBCI chief executive Nick Ashmore said: "These figures demonstrate the breadth of the SBCI's impact and the appetite among Irish SMEs for lower-cost funding that is more flexible and SME orientated.

“It’s great to be able to report that since the SBCI began lending to SMEs in March 2015, the pace of loan drawdowns has grown steadily as it has expanded its range of on-lending partners and product types.

“ In parallel we’ve seen a growth in new lending in the SME sector and a drop in interest rates for larger SME loans.”

Driving choice

Mr Ashmore said the first year of operation was focused on setting the “foundations for driving choice and competition” with five lenders on board by the end of 2015.

Some 8,619 Irish SMEs have received loans from the SBCI with a 154 per cent increase since December in the number of jobs supported by its lending activity, bringing the total to 43,349.

The average loan size is now €40,000, up from €37,000 in December 2015, with the largest loan being €5 million.

The SBCI said Irish SMEs benefited by an average of 1.5 per cent versus market rates for loans of less than €250,000, while the agricultural sector accounted for almost most of the value of loans.

The southwest of Ireland had the most SMEs using SBCI loans with more than 18 per cent of borrowers by region, while Dublin accounted for 15.3 per cent.

Commenting on the SBCI's performance, Minister for Finance Michael Noonan said: "Its success demonstrates that those who create jobs in the domestic economy can do so with the help of a range of finance providers. The SBCI is also offering finance providers new ways of engaging with their customer base. I welcome the broad regional spread of SBCI lending to SMEs with 85 per cent of lending outside of Dublin."

The SBCI has seven partners who channel the money to SMEs. These are AIB, Bank of Ireland, Ulster Bank, Finance Ireland, Merrion Fleet, First Citizen Finance and Bibby Financial Services Ireland.