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Monday 26 September 2016

Strategic Bank to commit more funds as lending rises

Paul O'Donoghue

Published 28/01/2016 | 02:30

A total of 4,619 SBCI loans were drawn down by Irish businesses in the year to the end of 2015.
A total of 4,619 SBCI loans were drawn down by Irish businesses in the year to the end of 2015.

The Irish Strategic Banking Corporation (SBCI) plans to draw down more new funds by the end of the year as it aims to kickstart lending to small and medium businesses (SMEs).

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The SBCI announced yesterday that SMEs drew down €172m in lower-cost funding from the State-backed organisation last year.

A total of 4,619 SBCI loans were drawn down by Irish businesses in the year to the end of 2015.

Launched last March, the SBCI is aiming to provide €800m in low cost funding to SMEs by the end of 2016 using funds sourced from the European Investment Bank, German bank KfW and the Ireland Strategic Investment Fund.

The organisation borrows its funds at cheaper interest rates and then passes the savings onto banks, who are then meant to pass the savings on to SMEs.

The SBCI has made about €750m available to five lenders including AIB and Bank of Ireland. Loan uptake on a quarterly basis has been gathering momentum since the SBCI began lending in March, with €71.5m in loans drawn down in the last quarter at the end of the year were drawn down, up 28pc on the previous quarter.

Speaking to the Irish Independent SBCI chief executive Nick Ashmore said the body is hoping that lending will ramp up even further in 2016.

"We are aiming to have the initial €800m lent by the end of the year," he said.

"I think it is possible, with the pick-up in the economy we are seeing companies in growth mode moving away from making repayments to investing."

He added: "We are sourcing more committed funding, we definitely need more, there will probably be an announcement in the next number of months."

He said that SBCI loans for amounts under €250,000 average about 4.5pc.

SBCI loans are available to independent enterprises which employ fewer than 250 people, with a turnover of €50m or less and with a balance sheet of €43m or less.

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