Danske exit sparks credit scheme revamp

The credit guarantee scheme is being overhauled to help thousands of businesses affected by the departure of Danske bank and other lenders.

The scheme had aimed to help over 5,600 viable businesses to get loan finance through a state backed guarantee for 75 percent of the sum, but just 146 businesses have availed of it over the past two years. Minister of state for small business Ged Nash said he planned to change the conditions of the scheme to help customers of banks leaving the Irish market.

“We can provide a government guarantee to refinance loans so they will be moved from one bank to another. The government will guarantee that loan and the credit guarantee period will be extended from three years to seven years,” he said.

Until now the scheme allowed for guarantees to be given only for new loans and not for refinancing arrangements. The revised scheme will provide an opportunity for up to 4,000 business customers of Danske Bank, which is exiting the Irish market to move their loans to other banks at competitive rates. The scheme will also be open to business that have loans with other banks exiting the Irish market such as Bank of Scotland (Ireland) and ACC Bank, the Irish subsidiary of Dutch lender Rabobank.

Nash said that the plight of business customers who had loans from exiting banks had been raised with him at the state run forum for small and medium enterprises (SMEs)

“There is an issue in relation to Danske Bank and that has caused some concern in the SME community” he said.

Nash is due to sign a ministerial order shortly to implement the changes to the credit guarantee scheme. It is most recent progress report noted that the usage of the scheme “remains disappointing” and “appears to be slowing”. So far just €20 million has been borrowed under the scheme even though the original target was €560 million. This has created 582 jobs and maintained a further 333 jobs but the original target was to create 4,000 jobs.

“We will be essentially launching that with an improved scheme that’s a really important initiative and something I know that the SME community will welcome.” Nash said.

(Credit: Sunday Business Post - By Michael Brennan)

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