Retail Ireland Welcomes State-Backed Funding For SMEs
Published on May 26 2014 4:51 PM in Retail
Retail Ireland, the Ibec group that represents the retail sector, welcomed the news that a new Irish Strategic Banking Corporation is being established to lend €500 million to the small and medium sized businesses (SME) sector.
The Government plans to set up the loan fund to help SMEs by the end of this year. The Strategic Banking Corporation of Ireland (SCBI), supported by German, European and Irish funds, will be the providers of the funds.
Minister for Finance Michael Noonan said, “The best way to see it is to see it as a fund, to see it as a big fund. We expect it over a five-year period to end up with a balance sheet of about €4 billion.”
Legislation for the loan fund is due to be enacted this summer, with €500 million credit available initially, and a further €300 million later, totalling €800 million.
Retail Ireland said, however, even though the economy was heading in the right direction, many viable retail businesses remained on the brink due to a lack of finance. Chairman of Retail Ireland Frank Gleeson said: "Retail Ireland has long highlighted the serious problem many retailers have accessing credit. These are solid, viable businesses, but they need ready access to credit to operate and expand. The current banking market is failing these companies - lending criteria is too restrictive and interest rates are too high. The new state backed bank should help address this problem. It is not a solution, but it is a very positive development."
Minister Noonan said that the loan fund will be a different type of lending: “A SME who traditionally has been going into the bank to renew working capital arrangements every 12 months to try and fund expansions on short-term loans of three years: they’ll be able to get 10-year money.”
Noonan said that it is likely the new loan fund will also provide repayment holidays for SMEs to provide some relief.