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Credit Guarantee Scheme Operations

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Minister for Jobs, Enterprise and Innovation (Deputy Richard Bruton)

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Snippet Contents:

The Credit Guarantee Scheme (CGS) began operations on 24th October 2012. By its nature the Scheme is demand driven. As at 4th October there were 69 live CGS facilities resulting in €9.7m being sanctioned through the Scheme by the participating lenders resulting in 433 new jobs being created and 139 jobs maintained. There are 3 banks participating: Bank of Ireland, AIB and Ulster Bank. Such an initiative has never been implemented in Ireland before, despite many calls for such a scheme to be introduced.
The key challenge in relation to this Scheme is to ensure that in the first instance the banks, and in particular, the relevant local level bank officials are aware that there is support for SMEs, who because of a lack of collateral (Pillar 1) and/or because of an inadequacy of understanding of the novelty of a business model, market, sector or technology, face difficulties in accessing traditional bank credit (Pillar 2). It is crucial that these bank officials see the Credit Guarantee Scheme as a key tool they have access to in order to facilitate lending to SMEs. Therefore, the banks need to integrate the Scheme into their credit function and to up-skill credit underwriters in relation to the Scheme. Any application for credit that is declined because of Pillar 1 and/or 2 should then be considered by the bank for inclusion under the Scheme. I have been assured by the banks of their support for the operation of the Scheme and that it is being promoted appropriately within the bank structures.
The second main challenge is around raising awareness amongst SMEs and their advisers. Awareness amongst these groups should increase the number of enquiries to banks for the Scheme, and this increase in demand should feed into the number of Credit Guarantee Facilities provided.
Given these challenges and because take-up continued to be slow, the Scheme was recently independently reviewed with a view to identifying the reasons for this and recommending changes to the Scheme design. The Review included detailed consultations with all key stakeholders. A Steering Group, chaired by my Department, is currently assessing the expert Review and will shortly report back to me outlining what action needs to be taken to amend the Scheme. I intend to publish the Review once this assessment is complete.
I will then take whatever action is necessary to maximise the take-up of the Scheme. This may include amending the Credit Guarantee Act 2012, making a new Credit Guarantee Scheme and re-launching the Scheme with a marketing campaign and communications strategy supported by all interested parties.
I recognise that there is a greater challenge around SMEs’ awareness of and understanding of the full suite of Government financial supports. The Government is working through the SME State Bodies Group, chaired by the Department of Finance, to develop a Communications Strategy in relation to all supports, financial and advisory, to business through the use of on-line and other resources and a Credit and Lending Newsletter for SMEs. This work is ongoing.