Sunday 18 March 2018

Farmers lead way as demand grows for loans from SBCI

Ellie Donnelly

Ellie Donnelly

Loans from the Strategic Banking Corporation (SBCI) to small and medium size enterprises stood at €855m at the end of June, according to latest figures from the State-backe fund.

This represents an increase of 57pc on the €544m in SBCI-supported lending at the end of December 2016, the mid-year update revealed.

SBCI loans have now supported a total of 21,132 small and medium enterprises employing 106,728 people, an increase on the 12,593 small and medium enterprises it supported at December 31 2016.

The increase in loans this year has been driven by the SBCI Agriculture Cashflow Support Loan Scheme which launched in January.

The SBCI says this represents a significant milestone in its efforts to introduce risk-sharing products into the SME finance market.

The scheme, which aims to support farmers experiencing short-term financial pressure due to price and income volatility, accounted for €118m in loans by end June 2017 and supported over 3,500 agri-business small and medium enterprises employing over 5,000 people.

The average loan size taken out by businesses under the Agriculture Cashflow Support Loan Scheme was €32,084. "These figures demonstrate the SBCI's strong impact and the significant appetite among Irish small and medium enterprises, including farmers, for lower-cost funding that is more flexible and designed to suit their specific needs," Nick Ashmore, CEO of the SBCI, said.

The scheme has proved so popular that farmers last month called for provisions to be made in Budget 2018 for a new €500m Government-supported low-cost loan fund.

Other sectors which have received support from the SBCI include the wholesale and retail sector which has received 17pc of the loans issued by the SBCI, the accommodation and food sector which was received 13.3pc (on a percentage of loans by value basis), and the manufacturing services sector which has benefited from 7.9pc of funding.

On loans of less than €250,000, small and medium enterprises benefited by an average of 1.15pc on loans from the SBCI versus market rates for loans.

The southwest of Ireland had the most small and medium enterprises using SBCI loans with over 18pc of loan numbers by region, while Dublin accounted for 14.8pc, and the Mid West of Ireland accounted for a further 14.3pc of the loans.

The Midlands had the least number of SMEs using the loans, with companies in that area in receipt of only 6.3pc of the SBCI funded loans.

The State-backed SBCI, which has also received funding from the European Investment Bank and German development bank KfW, was set up to channel cheap funding to small and medium enterprises via lending partners.

So far it has provided funds to banks including AIB and non-bank lenders like Billy Kane's Finance Ireland. Other lenders on its platform include First Citizen Finance.

"In just over two years since it started lending, the SBCI has achieved a lot. The pace of SBCI loan drawdowns has grown steadily and small and medium enterprises are benefiting from a bigger range of loans and a bigger range of lending partners," Mr Ashmore said. The SBCI plans to announce new on-lending partners shortly, adding to its seven existing partners, three banks and four non-bank lenders.

Irish Independent

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