Thousands of small businesses, including farmers and fishers, will be able to borrow more cheaply under the €2bn Covid-19 credit guarantee scheme finally being launched after a four-month wait.
Banks are expected to begin taking applications following a Government event today.
The scheme offers loans of €10,000 to €1m at below-market rates to small and medium-sized enterprises (SMEs) initially via AIB, Bank of Ireland and Ulster Bank. It includes provisions for unsecured loans of up to €250,000.
But the Irish SME Association says the cost for most firms still will be too high.
Taxpayers will underwrite 80pc of the risk. This is designed to spur retail banks to lend more at a time when they already face potential business loan defaults topping €1bn on their books.
The scheme arrives four months after its announcement - a delay dictated by protracted Government formation talks. It closely resembles pandemic supports already available in much of Europe.
Just like Ireland, the UK, Austria, Denmark and Portugal are offering 80pc taxpayer-backed guarantees on their emergency SME loans. Authorities in Spain and Sweden are underwriting 70pc of risk, the French 90pc.
Those approved can receive loans on terms ranging from three months to six years, including to refinance more costly existing loans.
Banks will have some flexibility to set rates in line with each customer's risk profile, but terms are expected to be significantly below current market rates exceeding 5pc on typical secured SME loans.
Ross McCarthy, chairman of the Irish SME Association, says the scheme's subsidised interest rates will still be too high for most firms, while banks will maintain a high bar.
"Loan interest rates of 3pc, unless staggered over a very long time, are unaffordable," Mr McCarthy said.
"The loan scheme is complex and subject to banks agreeing to underwrite the loans," he said. "It is difficult for many businesses to forecast the next six months of trading, so it is hard to see how such businesses will be deemed creditworthy."
Unlike the State's previous credit guarantee, this one will allow applications from tens of thousands of primary agri-food producers, including farmers and fishers.
Nonetheless, surveys consistently show most firms are loathe to take on new debt. This has been reflected in modest uptake of other Covid-19 loan supports.
For example, Enterprise Ireland says 1,100 firms have received €20m from its €180m fund, which offers loans of up to €800,000 at 4pc interest.
Mr McCarthy said most firms "have no appetite for debt" and need working capital to avoid "the real risk - businesses not paying one another as they run out of cash and close".
"Those that are taking out loans are well funded and are in a position to grow during this crisis," he said.