New €450m fund for cheaper SME lending on the way

SBCI has sourced a huge amount of new capital will now be available for smaller Irish businesses...

Hundreds of millions of new capital has been made available to finance additional competitive lending to the country’s small and medium sized businesses.

Newstalk has learned that the Strategic Banking Corporation of Ireland (SBCI) is set to announce today that it has sourced €450m in new funding to meet strong ongoing SME demand for competitively-priced business loans.

The new €450m fund comprises €200m in a long-term loan facility from the Council of Europe Development Bank in Paris and €250m in ten-year loan notes from the National Treasury Management Agency.

These new facilities will strengthen the SBCI’s ability to provide low-cost, flexible loans to Irish SMEs through its eight existing on-lending partners and its pipeline of new partners. It also brings additional diversification to the SBCI’s sources of funding.

The SBCI was established by the Government in late 2014 with an initial fund of €800m provided by the European Investment Bank and German development bank KFW.

Those funds have since been more than committed, and in the majority of cases drawn down through a range of eight different banks and non-banking financial institutions with whom the SBCI has entered agreements to provide loans to SMEs at lower than their standard rates.

SBCI lenders offer lower cost, longer term loans across a range of products including working capital, investment, agri-finance, invoice finance, fleet finance and leasing. On average, SMEs receive a discount of 1.5% on market rates for these loans.

SBCI CEO Nick Ashmore said: 

"We succeeded earlier this year in committing all of the €800 million that was made available to us when we began operations 2 years ago. Our new funding arrangements will allow us to support even more SMEs and bring even greater competition to the SME lending market.

"We have demonstrated that we are an effective conduit for a range of EU supports to the Irish economy, which has enabled the SBCI to source further funding from international and domestic sources."