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The Future Growth Loan Scheme- Accessing Finance in the face of Brexit

8 October, 2019 Author: Ciara Finnan

The Future Growth Loan Scheme the (“Scheme”) was approved earlier this year and aims to support small and medium sized businesses, in addition to the primary agriculture and seafood sectors which have particular exposure to the UK and may be most impacted by the UK leaving the EU on 31st October.

The Scheme provides loans between €50,000 and €3 million at a lower interest rate, for a term of 8-10 years with the purpose of long term investment into the business, for example for the investment in equipment, machinery, business expansion or process innovation. Specifically for those involved in primary agriculture, the loan can be used for long term investment in assets (tangible or intangible) linked to primary agricultural production such as the improvement of the overall performance and sustainability of the business. Below is a brief summary of the key aspects to consider in respect of the Scheme.

Those who are eligible to apply for the Scheme (the “Eligible Businesses”) are:
• small businesses with fewer than 50 employees with an annual turnover and/or balance sheet total not exceeding €10 million;
• medium businesses with between 50 and 249 employees with an annual turnover not exceeding €50 million or a balance sheet total not exceeding €43 million;
• small Mid-Cap businesses which are businesses with between 250 and 499 employees; and
• micro, small and medium sized businesses involved in primary agriculture (for example farmers or those involved in the seafood sector).
There is a particular focus on primary agriculture, farmers and the seafood sector and as such, 40% of the total fund, €120 million, is specifically available to farmers and food businesses. The Scheme represents an opportunity for our clients involved in food and agriculture to avail of finance at a favourable interest rate. Those who are in financial difficulty or are bankrupt will not be eligible to apply for the Scheme.

As noted above, the Scheme is designed to provide Eligible Businesses with loans, at a favourable rate, for a term of between 8-10 years with a purpose of “strategic long-term investment”. Micro, small and medium sized businesses involved in primary agriculture can avail of loans between €50,000 and €3 million. All other Eligible Businesses can avail of loans between €100,000 and €3 million.

A key feature of the Scheme is that loans of up to €500,000 may be unsecured which is a key advantage for Eligible Businesses. Further, Eligible Businesses can apply to multiple banks for loans which, if under €500,000, could allow access to multiple unsecured loans.

For the first six months of the loan, the interest rates are capped depending on the value of the loan. For example, loans up to €249,999 will have a maximum interest rate of 4.5% while loans of more than or equal to €250,000 will have a maximum interest rate of 3.5%. On the six month anniversary of the loan, the interest rate will become variable. The Scheme also offers optional interest only repayments for a period at the beginning of the term of the loan.

There are certain excluded activities which the loan cannot be used for and this depends on whether the applicant is a micro, small and medium sized businesses involved in primary agriculture or one of the other categories of Eligible Businesses.

A micro, small and medium sized business involved in primary agriculture cannot use the loan to support activities such as drainage works, the planting of annual plants, the purchase of animals or land or to comply with EU standards in force. All other Eligible Businesses cannot use the loan to finance export operations with other Member States, real estate development activity, the acquisition of shares or funding primary agriculture.

The above is a non-exhaustive list of the excluded activities. For more information, please follow the link below.

The Scheme is operated by the Strategic Banking Corporation of Ireland (the “SBCI”) through various participating lenders. The application process is a two stage process. First, applicants will be assessed for eligibility through the SBCI website (a link of which is provided below) and if successful, the applicant will be issued with an eligibility reference number. The applicant must then apply for the loan with one of the participating finance providers using the eligibility reference number.

It should be noted that when applying for a loan over €250,000 a business plan will be required for consideration. Further guidance on preparing the business plan can be found on the SBCI website here
For more information or advice, please contact any member of the FOD team.

Ciara graduated from Dublin City University in 2015 with an honours degree in Economics, Politics and Law, specialising in Law. Ciara has worked in other large commercial firms in the financial institution department….

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John graduated with an Honours BCL law degree from University College Dublin in 1994 and was admitted as a solicitor in Ireland in 1997. He has also diplomas in European Law from the Universite des Sciences Sociales, Toulouse and the University of Amsterdam….

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