Government to extend Credit Guarantee Scheme and redundancy provisions
The Government has decided to extend two measures which were brought in to help businesses during the Covid-19 pandemic.
The Covid-19 Credit Guarantee Scheme (CGS) will now stay open for new
applications until the end of June. It had been due to close at the end
of the year.
The suspension of redundancy provisions relating
to temporary lay-off and short-time work, which arose as a result of
Covid-19, will also be extended until the end of March 2021.
The €2 billion Covid-19 Credit Guarantee Scheme, launched in
September, was brought in to provide low cost loans to businesses from
€10,000 to €1mn.
The scheme was originally due to close at the end of December, but
with an average of 180 businesses now drawing down loans each week,
applications will remain open for another six months.
The risk of the loan is borne 80% by the State and 20% by the financial institution.
For a company to avail of the scheme, it must have sustained a
minimum 15% fall in profits or sales due to the fallout from the
pandemic. The loan can be worth up to 25% of a company’s 2019 turnover
or twice its wage bill.
This extension has been made possible due to a change in the rules under state-aid at EU level, the Government said today.
Leo Varadkar, the Tánaiste and Minister for Enterprise, Trade and
Employment, noted that the Covid-19 Credit Guarantee Scheme was the
biggest state-backed loan guarantee in the country’s history.
“It is part of a larger package of grants, wage subsidies, tax
reductions and other low-cost loans, we have put in place to help
businesses during this exceptionally difficult time,” Mr Varadkar said.
The Minister said the extension of the scheme will give business a
level of certainty that if they need liquidity, the Government can
He also said the scheme will see some new, non-bank lenders,
including credit unions, joining in the coming weeks which should
increase its accessibility and visibility.
Meanwhile, the suspension of the redundancy provisions has been extended until March 31.
This will help avoid further permanent job losses at a time when some
350,000 people are in receipt of the Pandemic Unemployment Payment
(PUP) and 41,200 employers have registered for the Employment Wage
Subsidy Scheme (EWSS).
The Tánaiste said he wanted to acknowledge how difficult this year has been for businesses and their staff.
He said he knows today’s news will be really disappointing for some
staff who were hoping to take redundancy before the end of the year.
“This was a really difficult decision for the Government to make and
not one which was taken lightly. It was taken in the best interests of
society as whole in order to avoid the triggering of further business
failures and job losses,” Mr Varadkar said.
He also said that the first quarter of 2021 will be particularly
challenging for many businesses which apart from dealing with
considerable trading difficulties due to Covid-19 will also be facing
the added disruption and uncertainty of Brexit.
“We want to help businesses to survive this period so that we can
protect as many jobs as possible and get people back to work as soon as
it is safe to do so,” he added.
The Government also today agreed to fund outstanding applications to
the closed Restart Grant Plus Scheme, which has now been replaced by the
Covid Restrictions Support Scheme (CRSS).
The Government has approved a total of €685m for over 117,000
applications, at an average payment of €5,800, since the scheme was
launched in May.
About 11,000 applications are still outstanding for the scheme and
the Government has allocated a further €33m to meet this cost.