2.14 Access to Finance

2.14 Access to Finance

Access to finance is a critical business need. Along with liaising with the main banks on issues relating to the agri-food sector, the Department of Agriculture, Food, and the Marine (DAFM) works closely with the Department of Enterprise, Trade and Employment (DETE), the Department of Finance (DoF) and the Strategic Banking Corporation of Ireland (SBCI) to provide financial supports to small and medium-sized enterprises (SME) in Ireland. The SME sector includes farmers, fishers, foresters, and food businesses. Access to finance is vital in helping businesses to deal with challenges in the economy. Economic disruption arising from events such as Brexit, COVID-19 and most recently the conflict in the Ukraine have increased the need for SME supports. Financial supports in the form of loan schemes are delivered via approved lenders including the pillar banks, credit unions and other financial institutions.

Several loan schemes have already been delivered via this partnership to date including the Brexit Impact Loan Scheme (BILS) (incorporating the Covid Loan Scheme (CLS)) and the Covid-19 Credit Guarantee Scheme (CCGS).

Ukraine Credit Guarantee Scheme (UCGS) The effects of the Ukraine Crisis on the Irish economy have been wide and varied. Supply chain disruptions, increases in input (including energy) costs and rising inflation have had a significant impact on businesses ability to raise much needed working capital and support longterm strategic investment. To address this, in July 2022 Government approved the drafting of legislation to allow for the creation of a successor to the COVID-19 Credit Guarantee Scheme (CCGS), to facilitate lending of up to €1.2 billion to SMEs, primary producers, and small midcaps. Loans of up to €1 million are available. The UCGS assists businesses, including farmers, fishers, forestry and food businesses in meeting liquidity and investment needs.

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The UCGS allows these businesses to spread the increased costs by making loans available for terms of up to six years. It assists with the absorption of the cost of disruption and aids their businesses to become more resilient in the face of business shocks. Personal guarantees and collateral requirements, a major disincentive for SMEs, are not required for loans of up to €250,000. The Scheme will be available until 31 December 2024.

Loan features are broadly like the COVID-19 Credit Guarantee Scheme (CCGS) in terms of loan type, tenure, and credit amount available. The CCGS saw over €700 million in lending to 9,800 businesses over the course of its deployment. These loans helped to maintain over 81,000 jobs in Ireland. The UCGS is expected to provide a similar level of aid to those businesses in need, in an effective and widely available manner that has already proved successful. It opened for applications in January 2023.

Future Growth Loan Scheme (FGLS) The FGLS was developed by DAFM and DETE, in partnership with the DoF, the SBCI and the European Investment Fund (EIF). It was delivered through participating finance providers and made up to €800 million of investment loans available to eligible Irish businesses, including up to 40% ringfenced for the agri-food & seafood sectors.

The FGLS was established to address the need for longer-term unsecured lending. The unique features of the scheme facilitated access to finance for young and new entrant farmers, especially the cohort who do not have high levels of security. It also aimed to serve smallerscale farmers who often do not have the leverage to negotiate more favourable terms with their banking institution. The loans were competitively priced with an initial maximum loan interest rate of 4.5% for loans less than €250,000. They were available for terms of 8-10 years and supported strategic long-term investment in a post-Brexit environment. A minimum loan amount of €25,000 applies up to a maximum of €3,000,000 per applicant.

Due to significant levels of demand, a second tranche of €500 million was launched in 2020. It reached capacity and closed on 31st March 2023. Under the €800m loan scheme, some 1,601 (46%) loans were to the agri-food sector, accounting for €237 million (31%) of the value.

Growth and Sustainability Loan Scheme (GSLS) Following the rapid deployment of the €800m FGLS, DAFM and DETE have developed a new long-term investment loan scheme for SMEs, in cooperation with the SBCI and the EIF. GSLS builds on the success of the FGLS and addresses the lack of suitable long-term finance products available in the Irish market. As SMEs address the impact of the war in the Ukraine and recover from Brexit and the COVID-19 pandemic, they need to consider and be encouraged to invest in their business.

GSLS, delivered by the SBCI, will provide an uncapped 80% guarantee to participating onlenders. It will make up to €500 million in funding available to SMEs, including farmers, fishers, foresters, and food businesses, at favourable terms and conditions. Under the GSLS, 70% of lending will be for strategic investments with a view to increasing productivity and competitiveness and thus underpinning future business sustainability and growth. A minimum of 30% of the lending volume will be targeted towards climate adaptation and environmental sustainability purposes with the aim of helping SMEs to invest in sustainability and energy efficiency.

Loans will be allowed for investment purposes only. Loans will be of between €25,000 and €3 million, with maximum loans to small midcaps limited to €937,500 due to State-Aid regulations. Loans will be for terms of 7 and 10 years. Loans of under €500k do not require security. Interest and capital moratoria of up to 90 days are permitted under the EIF guarantee for the scheme. The discounted interest rates reflect the significant coverage provided to the lenders under the SBCI 80% guarantee, with a preferential interest rate for Climate Adaptation and Environmental Sustainability loans.

		3 CHAPTER		Agricultural Commodities and
Inputs
Intermediate consumption Milk accounted for Cattle numbers in the (farm inputs) in 41% of total agricultural EU27 have dropped from 2022 cost output by value in 2022, 79.7 million with a value of €7.92 billion in 2016 to , €5 billion up 29% on 2021. . 74.8 million in 2022.