Despite availability of the State-backed €2billion COVID-19 loan scheme, many businesses are not borrowing right now. Government supports such as – EWSS and CRSS – are keeping things afloat and businesses are averse to taking on further debt. This may change as businesses reopen. We recommend planning ahead, looking at short to medium-term cash flow and being proactive about any financial support your business may require.
If you haven’t done so already three of the best finance schemes we recommend you look into are the Covid-19 Working Capital Loan Scheme, Future Growth Loan Scheme and Revenue Commissioners’ Tax Debt Warehousing Scheme.
If you are approaching banks for financial supports do so as early as you can as there may be delays due to high demand. We also recommend that you come prepared with a good overview of your financial position. A short terms cash flow model provides an overview of monies coming in and going out over the next quarter. A rolling model, can quickly determine if you are facing a short-or medium-term financial crisis and can demonstrate to the bank the extent of the crisis and the amount of financial support required.
We are here to help. If you have any questions on any of these schemes or need assistance with any aspect of financial planning, contact Jamie O’Hanlon and team on 0818 303 087 or email info@avidpartners.ie
Read on for full details of all three schemes:
1. Covid-19 Working Capital Loan Scheme
This is a good option for those businesses with short- or medium-term requirements.
This scheme offers loans up to five and a half years. Loans are flexible to suit your business needs whether that’s future working capital requirements or you need to fund innovation, change or adaptation of the business to mitigate the impact of Covid-19. Repayment terms are flexible – interest only for a period of time or a short-term moratorium – as long as the loan is repaid in the 5 and half years time frame.
How To Apply
Covid-19 Working Capital Loans are available through AIB, Bank of Ireland and Ulster Bank. Before approaching a lender, businesses must first receive their eligibility letter from the Strategic Banking Corporation of Ireland (SBCI).
A part of the applications process, you must provide a business plan. The rationale behind providing a plan is to assist you in reviewing your business and to help you plan for Covid-19 and future business strategies. To get you started, SBCI provides a Business Plan template setting out suggested headings and content required.
Further Details
Further information on the loan application process including detailed eligibility criteria, loan terms and the business plan template can be accessed here.
2. Future Growth Loan Scheme
This is a long-term loan (7-10 years) that can be used to support organic growth, or it can support an acquisition.
Availability
(April 2021) Close Brothers and KBC Bank are accepting loan applications for the Scheme from businesses meeting SBCI eligibility. Potential borrowers in the Agriculture sector should be aware that KBC’s product range is aimed at SME business customers only and that it does not offer funding in the Agriculture sector. AIB, Bank of Ireland, permanent tsb and Ulster Bank FGLS capacity has been fully subscribed and is no longer available.
Eligibility
Successful applicants can access loan amounts from €25,000 to a maximum of €3,000,000 per eligible applicant. Maximum loan interest rate of 4.5% for loans < €250,000 and 3.5% for loans >= €250,000 with optional interest-only repayments available in certain circumstances. Loan terms range from 7 to 10 years
Applicants for loan in excess of €250,000 must submit a business plan to the relevant financial provider. Again SBCI provides a template outlining the content required.
Further Information
Further information on the Future Growth Loan Scheme application process including detailed eligibility criteria, loan terms and the business plan template may be accessed via SBCI’s website
3. Tax Debt Warehousing
The Debt Warehousing Scheme allows tax debts incurred by businesses during the period of restricted trading caused by Covid-19 to be ‘parked’ on an interest free basis for 12 months following the resumption of trading.
At the end of the 12-month interest free period, the warehoused debt may be paid in full without incurring an interest charge or paid through a phased payment arrangement at a significantly reduced interest rate of 3% per annum.
This compares to the standard rate of 10% per annum that would otherwise apply to such debts.
The key condition to avail of the scheme is that you must file your taxes on time . Further information available on Revenue’s site here
Further Reading
- Avoiding cash flow issues when your business re-opens, 31 March 2021, Jamie O’Hanlon in conversation with Fiona Alston, RTE Boost My Business
Need Help?
If you need any assistance with accessing capital, applying to business loan schemes or any aspect of financial planning, do get in touch with Jamie O’Hanlon and team at info@avidpartners.ie or call us on 0818 303 087.
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