The Strategic Banking Corporation of Ireland (SBCI) has secured a further €450 million in funding for Irish SMEs.
The organisation, which provides lower cost funding through a range of banks and financial institutions, will receive €200 million from the Council of Europe Development Bank in Paris, and the remainder from the National Treasury Management Agency.
Nick Ashmore, the chief executive of SBCI, said that the new credit facilities would strengthen the SBCI’s ability to provide low-cost, flexible loans to Irish SMEs and further diversify its sources of funding.
AIB, Bank of Ireland, Ulster Bank, Bibby Financial Services and Finance Ireland are among SBCI’s lending partners.
Mr Ashmore said: “We succeeded earlier this year in committing all of the €800 million that was made available to us when we began operations two years ago. Our new funding arrangements will allow us to support even more SMEs and bring even greater competition to the SME lending market.
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“We have demonstrated that we are an effective conduit . . . which has enabled the SBCI to source further funding from international and domestic sources.”
The SBCI sourced its initial funding of €800 million from KfW, the German development bank, the European Investment Bank and the Ireland Strategic Investment Fund. So far €458 million has been drawn down by more than 11,500 Irish SMEs.
On average loans sourced through the SBCI have interest rates 1.5 percentage points lower than those available through traditional means.
Figures released by the Central Bank yesterday showed that gross new lending to SMEs was €359 million higher in the third quarter of the year compared to the same period in 2015.
The increase was driven largely by greater demand from the property sector, which accounted for 44 per cent of new lending in the third quarter, when financial companies were excluded.
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New lending to businesses operating in sectors other than finance and construction was €78 million higher on an annual basis at €671 million.
At the end of September, there was €30.9 billion in SME loans outstanding — 11.7 per cent lower than a year previously. Companies have paid down their debts at a faster rate than they have taken on new loans for 20 consecutive quarters.
The average interest rate charged on new loans fell by 0.8 percentage points to 3.75 per cent over the course of the past 12 months but remains higher than the 3.12 per cent average rate on existing loans. Research released by the Department of Finance earlier this week, which was based on a survey of more than 6,500 businesses, indicated SMEs were paying a much higher average interest rate of 5.24 per cent.