Thirteen Credit Unions represented by Metamo, the Irish League of Credit Unions (ILCU) and the Credit Union Development Association (CUDA) have joined the €1.2 billion Ukraine Guarantee Scheme as lenders.

The scheme was launched at the beginning of this year and facilitates loans for working capital and medium-term investment to assist businesses with liquidity and in improving energy efficiency.

The important features of the scheme are:

• No personal guarantee or collateral required for loans up to €250,000
• Loans of up to 6 years and €1 million
• Reduced interest rates (vs standard market rates)
• Pre-eligibility available on Strategic Banking Corporation of Ireland (SBCI) Hub speeds up the process

Businesses will have certainty that their liquidity funding needs can be met through low-cost loans supported by the government. This is a central pillar of the government’s response to aid businesses impacted by rapidly rising costs as a result of the invasion of Ukraine.

• This is a scheme for SMEs, primary producers, and small mid-caps (defined as businesses with up to 499 employees). SMEs are expected to be the main beneficiaries.
• To qualify for the scheme, the borrower will have to declare that costs have increased by a minimum of 10% on their 2020 figures and that the loan is being sought specifically as a result of difficulties being experienced due to the Ukraine crisis.
• Loans will be available to viable businesses only and it must be a new loan with no refinancing.
• The ceiling of funding available under the UCGS is €1.2 billion.
• A guaranteed rate of 80% for the State with the lenders retaining 20% of the risk of the loan.
• The current standard facility size of €10,000 to €1 million under the current Acts will remain for the UCGS.
• The products covered under the scheme include a broad range of credit facilities including overdrafts, working capital and term loan facilities.
• Capital and/or interest moratoria for specific periods of time (up to three months) will be permitted under the scheme but any decision regarding such moratoria will be at the discretion of the individual lender based on their assessment of their customer.
• The scheme has been prepared in order to comply with the terms of the European Commission’s Temporary Crisis Transition Framework for State Aid. In particular:
  • Primary agricultural, fisheries and aquaculture producers may be included.
  • A guaranteed premium on each loan under the scheme is required to be paid in addition to interest rate costs. The premia range for SMEs is 0.29% for loans of 1-3 years and 0.68% for 4-6 years. For small mid-caps, the range is 0.73% for 1-3 years and 1.55% for 4-6 years.
• The scheme is timebound and will be available until 31 December 2024.
• Businesses apply through the SBCI Hub, via sbci.gov.ie. This is an easy-to-use online application. If successful, the applicant will receive a code which can be used at any participating finance provider.