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The Ukraine Credit Guarantee Scheme: What Farmers Need To Know

Farmers will be able to avail of the new Ukraine Credit Guarantee Scheme (UCGS).

Details of the new scheme were today unveiled by the Department of Enterprise, Trade and Employment (DETE) and the Department of Agriculture, Food and the Marine (DAFM). The objective of the scheme is to provide SMEs and Small Mid-Caps with access to low-cost finance. The scheme extends to primary producers, and therefore incorporates farmers.

Response to the Ukraine Crisis

The Ukraine Credit Guarantee Scheme was created as a direct response to the dire economic circumstances precipitated by Putin’s war in Ukraine, and will enable struggling businesses, already facing supply chain disruption and input costs, with easier access to working capital.

According to the Government, the cost will be covered in part by the participant, who is expected to pay a risk premium on any credit advanced. A statement published on the Government website states that “this premium will be incorporated into the margin on the loan, collected by the on-lender and paid to Government of Ireland.”

Who is eligible to apply?

As stated above, the scheme is targeted at SMEs and Small Mid-Caps. This includes primary producers, so farmers will be able to apply.

However, it should be noted that SMEs are classified according to the EU definition. This means that the business must have fewer than 250 employees and have annual turnover of less that €50 million. (I can’t see too many farmers exceeding those limits!

Aside from this, all farmers applying must be based and operating in the Republic of Ireland.

How much can I borrow?

The amounts available for businesses to borrow under the scheme will range from €10,000 to €1,000,000, and may be paid back over a period of up to 6 years. However, it should be noted that loans of less than €250,000 will be unsecured.

Loans may be secured under this scheme up to 31st of December, 2024.

How can I apply?

In the first instance, applicants should register on the SBCI Hub. An Eligibility Application Form should be submitted, as this will confirm whether applicants are eligible to avail of the scheme. Once an application has been deemed eligible, the applicant will be issued with a unique eligibility code.

This eligibility code should then be provided to the participating lender.

Once the lender has the eligibility code, the application can begin. However, the Government website advises all applicants not to assume that the eligibility code guarantees lender approval. There is no legal obligation on the lender to finance an applicant purely on the basis of possession of an eligibility code. Instead, approval will be subject to the individual lender’s credit criteria, policies and procedures.

Who can I lend from?

At the moment, the only lender to formally declare its participation is Bank of Ireland. However, it is expected that more lenders will sign onto the scheme over the coming weeks. This means that we should all keep an eye on the SCBI website over the days ahead. Most people expect the other Irish banks to sign onto the scheme before long.