The Farmer’s Guide to New Covid-19 Government Loans

Two new loan schemes, which will be of great interest to farmers and rural businesses, have been announced by the Strategic Banking Corporation of Ireland (SCBI) over the past fortnight.

Programs are to be rolled out to main street lenders in line with previous iterations.

Both programs – a Covid-19 loan program and an SBCI energy efficiency loan program – offer low-cost financing, with unsecured options available for both loan programs.

Covid-19 loan program

Firstly, the Covid-19 Loan Scheme replaces the now closed previous iteration, Covid-19 Credit Guarantee Scheme (CCGS), and offers loan facilities of between €25,000 and up to €1,500,000, with tenors of one to six years and without guarantee up to €500,000.

Financing can be obtained for working capital, investment and to partially refinance such past expenditures.

To be eligible for this particular loan program, the company’s turnover or profit must be negatively impacted by the Covid-19 pandemic by at least 15%. Some specific exclusions apply, such as the purchase of property.

Interest rates are very competitive, especially for unsecured loans which generally carry a risk premium.

Typically, unsecured borrowings directly from banks can carry interest rates close to and even above 10%, while unsecured financing obtained from a bank, in conjunction with SCBI approval, can carry rates below 4%.

Note that the rates for these loans are variable rates and given that the interest rate environment is expected to warm up in the short term, it is plausible that the variable rates applicable to these schemes will also face increases.

Loans are available until December 31, 2022or until the plan has been fully subscribed.

Energy Efficiency Loan Program

The second program announced by the SBCI is a €150 million energy efficiency loan program to help SMEs and farmers reduce their energy bills and reduce their carbon emissions by investing in energy saving measures. of energy.

The objective of the program is to offer discounted term loans, asset finance and installment sales to SMEs and farmers considering investing in a range of energy efficient equipment including solar panels, heat pumps, LED lighting and other energy efficient technologies.

As with the Covid-19 loan program, interest rates will start at just 4% with financing amounts ranging from €10,000 to €150,000 over terms of up to 10 years.

The new scheme is available immediately through Bank of Ireland, with several other lenders expected to follow in the coming weeks.

Launching the scheme, SBCI stressed that the fund would support the Government’s broader plans to accelerate Ireland’s transition to a net zero economy and that it would enhance the sustainability of participating SMEs and agricultural businesses.

Finance Minister Paschal Donohoe, at the launch of the program, said: “Companies using the Energy Efficiency Loan Program can improve their competitiveness, meet their energy costs and enhance their reputation by meeting expectations. customers in terms of sustainability. I urge companies to take advantage of the new investment opportunities this creates.

To be eligible for funding, energy efficiency equipment must be listed on the Sustainable Energy Authority of Ireland’s (SEAI) “Triple E Register for Products” – a list of energy efficiency products that all meet a minimum set of energy efficiency criteria.

The program will run until fully subscribed with a cut-off date of December 31, 2023. Further information on both programs is available from SBCO and lending partners.

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