The Credit Guarantee Scheme, expected to provide an additional €150m in lending for small businesses per year over the next three years, will go live next Wednesday October 24 it has been announced.
The Scheme aims to help SMEs unable to source credit from banks. It is intended to address market failure affecting commercially viable businesses in where businesses have insufficient collateral, and where businesses operate in sectors with which the banks are not familiar. It provides a 75 percent State guarantee to banks against losses on qualifying loans to firms with growth and job creation potential.
The Scheme will be demand-led, and take-up and performance will be closely monitored.
For every €150m of additional lending, the Scheme is expected to benefit over 1800 businesses and create over 1300 jobs. The cost of the Scheme per €150m of lending is €6.38m. However this does not take into account benefits to the exchequer this lending will bring in terms of increased tax receipts and decreased social welfare payments. When these benefits are taken into account, the net gain to the Exchequer is over €25m per €150m of lending, representing a 400 percent return on the State’s investment.
The Government has also today published its third Quarterly Progress Report on the Action Plan for Jobs 2012.