COVID-19:  €2 billion Credit Guarantee Scheme Enacted

The Oireachtas (Irish parliament) swiftly enacted legislation giving unprecedented support to the continued availability of liquidity to Irish businesses.  The Credit Guarantee (Amendment) Act 2020 (the “Act”) enables the Minister for Jobs, Enterprise and Innovation (the “Minister”) to establish and operate a €2 billion credit guarantee scheme aimed at small-and-medium-sized enterprises (“SMEs”) and some larger Irish-based businesses.

What does the legislation do?

The Act amends the Credit Guarantee Acts 2012 to 2016 by adding a new “Covid-19 credit guarantee scheme” (the “Covid-19 scheme”) to the existing SME credit guarantee schemes.  The Covid-19 scheme operates independently of those other schemes and is far more ambitious in its scale and scope.  The precise functioning of the Covid-19 scheme (which is required to be compliant with the European Commission’s State aid Temporary Framework) is set out in forthcoming Ministerial regulations.1

What does the scheme do?

The stated purpose of the Covid-19 scheme is to support the needs of businesses to access additional finance as a result of the Covid-19 crisis.  This purpose is achieved by enabling the Minister to guarantee up to 80% of credit provided by a “participating finance provider” to a “participating enterprise”, thereby significantly improving the risk profile of credit applications that come within the scheme’s scope.

The maximum aggregate amount of credit that the Minister can issue guarantees in respect of is €2 billion and the Minister’s maximum aggregate potential liability under such guarantees is €1.6 billion. 

What borrowers are eligible?

The Covid-19 scheme applies to a broader range of potential borrowers (“qualifying enterprises”) than the previously existing credit guarantee schemes, which are limited to SMEs.  To be a qualifying enterprise, a person must either:

1. meet the SME criteria for the existing credit guarantee schemes, namely:

  1. be established in the State, employ fewer than 250 persons (whether or not in the State), and
  2. have an annual turnover not exceeding €50 million, or an annual balance sheet total not exceeding €43 million; or

2. be established in the State and employ not more than 499 persons (whether or not in the State).2

What financial products are in scope?

The Covid-19 scheme extends to the same broad range of financial products that are covered by the existing credit guarantee schemes, namely each of:

  • a loan facility (not including an overdraft, credit card or credit line facility);
  • a “credit facility” (which encompasses facilities other than loan facilities under which the borrower, or a person nominated by the borrower, is provided with a sum of money on condition that it be repaid);
  • an “asset credit facility” (under which tangible moveable property is provided in return for scheduled payments eg a finance lease); and
  • an invoice finance facility.

Who is a participating finance provider?

To benefit from the Covid-19 scheme the credit-provider must be a “participating finance provider”, which requires an application to the Minister for certification and an agreement to comply with the conditions of the Covid-19 scheme.  The details of precisely what is required are set out in Ministerial regulations.


For both lenders and borrowers, the Covid-19 scheme was welcome news.  This State support sensibly builds on existing credit guarantees mechanisms (first established in 2012) which should provide an efficient and effective way of promoting the availability of crucial liquidity to Irish businesses as they trade out of the difficulties created by Covid-19.

  1. The Covid-19 Credit Guarantee Scheme 2020 (SI 325 of 2020).
  2. The employee, annual turnover and annual balance sheet criteria are to be calculated by reference to European Commission Recommendation (2003/361/EC) of 6 May 2003, concerning the definition of micro, small and medium-sized enterprises.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.