According to non-bank lender Linked Finance, government emergency aid for small businesses is too slow and difficult to access and should not be channeled only through pillar banks.
Inked Finance, which is keen to be included in the support program, cited figures showing only a â¬ 11 million levy on 56 companies in the government’s initial â¬ 200 million emergency capital pool for small and medium-sized enterprises (SMEs).
The Covid-19 Working Capital Scheme, launched on March 10, allows SMEs to apply for loans up to â¬ 1.5 million via AIB, Bank of Ireland or Ulster Bank. They must first be deemed eligible by the Strategic Banking Corporation of Ireland and then go through a traditional loan application.
The program includes government taking out unsecured loans of up to â¬ 500,000. The terms include potential repayments over seven years with interest rates capped at 4pc.
But Linked Finance said SMEs in other European countries are receiving much wider and more flexible financing options under state-backed programs that allow alternative lenders like Linked Finance to participate.
He called the current government program “well-intentioned but not delivering on the scale required” and described the level of state guarantees as “insufficient for lenders to be willing to deploy capital given the magnitude of uncertainty “.
“Time is running out for Irish SMEs and it is vital that the government act quickly to expand the lending support it can provide,” said Niall Dorrian, Managing Director of Linked Finance.
âUnderstandable efforts to ensure that public money is not poorly spent have created layers of complexity that destroy the value of the programs currently in place,â he said.
The UK government this week started offering state-guaranteed emergency loans to SMEs using both pillar banks and a non-bank lender, Funding Circle, as funding channels. Mr Dorrian said the Irish scheme should also be open to non-bank lenders.
Linked Finance enables Irish small business loans using a peer to peer lending model. This involves investors willing to lend money to companies looking for financing. It has provided â¬ 133 million to 2,500 companies since 2013.