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 help.
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.
Article Source: Government to extend Credit Guarantee Scheme and redundancy provisions – RTE