The purpose of the Credit Guarantee (Amendment) Act 2022 is to make certain amendments to the Credit Guarantee Act 2012 (as amended) to support the needs of businesses to access additional finance in response to the economic difficulties resulting from the aggression against Ukraine by Russia by creating a specific Ukraine Credit Guarantee Scheme.
The purpose is also to amend the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021.
There is a new “Ukraine credit guarantee scheme” in the Act of 2012 that is needed for other changes made elsewhere in this Act.
It allows for for the extension of classes of enterprises which can qualify for the Ukraine credit guarantee scheme, to include small mid-caps. Primary producers are also to be included.
The Minister has the power to give guarantees.. The existing scheme was subject to a portfolio cap of 13% under the 2012 Act (as amended) but there is no portfolio cap for the Ukraine scheme; and the existing scheme had a maximum yearly credit amount which can be guaranteed of €150 million whereas the Ukraine scheme has an overall maximum credit amount of €1.2 Action.
There is power for the Minister to give guarantees in accordance with the Ukraine credit guarantee scheme. The Ukraine scheme will be open for guarantees to be put in place until the 31st December 2024. These guarantees will not extend beyond 6 years in duration. The maximum amount of credit to be covered by these guarantees will not exceed €1.2 Action, and the Minister’s liability in respect of those guarantees will not exceed €960 million.
The maximum liability of the Minister in relation to the existing credit guarantee scheme shall remain as not exceeding €15.6 million, and that there will be a separate provision for a maximum liability in relation to the Ukraine scheme (of €960 million, ).
The 2022 Act increases the aggregate liability limit to €180 million in respect of contributions committed under all agreements between the Minister for Enterprise, Trade and Employment and the Minister for Agriculture, Food and Marine, and the Strategic Banking Corporation of Ireland (SBCI), for the time being in force, from a limit of €50 million. The increase to the ceiling is needed so that the Ministers can work with the SBCI to make new loan schemes available to SMEs.