Irish SMEs have a reputation for getting by without much outside funding. They invest at broadly the same level as their European counterparts, but they’re less likely to borrow to pay for that investment. SMEs are typically good at managing cash flow, and, if they grow, they tend to grow organically.
71% of SMEs still see access to finance as a key risk to their business. Not borrowing can mean they aren’t investing at the optimal level, limiting their ability to grow. This is a preoccupation for the government because SMEs account for half of all employment in Ireland. Stagnating SMEs are bad for economic recovery.
The funding landscape has changed a lot. There used to be few realistic sources of external finance beyond traditional banks. Today, interest rates have stabilised, competition among lenders has intensified, and state-backed channels are expanding. Access to finance has genuinely eased for Irish SMEs; if you haven’t looked at your funding options in a few years, the landscape has changed enough to be worth another look.
In the last decade or so we have seen a significant increase in non-bank activity, including private credit funds, with about one-third of new SME lending value coming from non-bank lenders. Completing this picture is Microfinance Ireland (founded in 2012), which has so far approved around €100 million in loans to micro-businesses. And SBCI (founded in 2014) has really boosted access to finance for Irish SMEs.
SBCI makes funding more accessible
SBCI doesn’t lend directly to businesses but cuts the cost of borrowing for SMEs across the board by channelling public funding through banks and non-bank lenders alike. Participating on-lending partners – banks, alternative lenders, and credit unions – use SBCI-backed funding to offer better pricing and terms than they might otherwise be able to. The field of potential lenders is wider than just the pillar banks, so SMEs have more scope to shop around and choose a lender whose process and terms suit them, rather than being tied to whichever bank they’ve always used.
The mechanics of accessing SBCI-backed finance are simple: apply through a participating lender, expect to show a clear plan for the funds, and take advantage of the wider pool of lenders now competing for SME business. Businesses that go in prepared (with their numbers in order and professional advice from an accountant or business advisor behind them) are consistently the ones who get through the process fastest.
Where traditional banks still fall short
Traditional banks have a track record of asking for endless rounds of documentation, requiring large personal guarantees, and moving at a glacial pace – sometimes taking months to reach a decision. Alternative lenders are much more flexible and understand that time is money, with some able to process applications in a week or two rather than six months.
We’ve also seen first-hand that not every lender correctly factors in a government-backed guarantee when assessing a loan application. If a scheme includes a credit guarantee, it’s worth confirming directly with the lender that this has been reflected in how the risk and terms of the loan are being assessed, since it can affect both the interest rate offered and the likelihood of approval.
Strategic Banking Corporation of Ireland (SBCI) products
SBCI’s current main products are:
Term Loans
Term loans are aimed at start-ups and micro-enterprises (businesses with fewer than 10 full-time employees and annual turnover up to €2 million), particularly those who’ve struggled to secure finance from banks or other commercial lenders. They’re delivered through Microfinance Ireland (MFI), which uses SBCI funding to offer lower rates than its standard products.
You can borrow between €2,000 and €50,000 over a typical term of three years. The interest rate is fixed at 6.5% APR, with a 1% discount available if you apply through your Local Enterprise Office (LEO) or are referred by a bank. The loans are tailored around three scenarios: Start-Up Loans, Cashflow Loans, and Expansion Loans, so the product can flex to match where a business is in its growth.
There are no fees, charges, or penalties for early repayment, and Start-Up Loans come with the option of an interest-only period to ease early cash flow pressure. Applicants also get free mentoring through the LEO.
Green Transition Finance
Green Transition Finance is for SMEs and small mid-caps investing in sustainability. It’s delivered in partnership with the European Investment Fund’s InvestEU Guarantee Programme, with BVP managing eligibility and applications on the ground.
You can borrow between €500,000 and €5,000,000, over terms of up to 10 years, with competitive rates and repayment terms tailored to the purpose of the loan. It’s usually structured as senior debt, though subordinated debt positions are considered on a case-by-case basis.
A business can qualify in one of two ways. Either it already operates sustainably (for example, developing clean energy or climate technology, generating at least 90% of turnover from a defined list of green activities, or holding an eco-label or environmental certification) or the loan is being used to fund a specific green or sustainable investment (for example, energy efficiency upgrades, renewable energy installations, low-emission vehicles, circular economy initiatives, or climate adaptation projects). A business doesn’t need to already be “green” to qualify; funding a qualifying project is enough. Given the range of qualifying activities, it’s worth checking eligibility directly with BVP or via the EIF’s online sustainability checker rather than assuming a project doesn’t fit.
Invoice Financing
Invoice Financing releases cash tied up in unpaid customer invoices rather than waiting for standard payment terms to run their course. Delivered through Bibby Financial Services, it typically releases up to 90% of an invoice’s value within 24 hours of it being raised, with the remainder paid out once the customer settles. Because the facility is secured against the sales ledger, it scales automatically as a business’s sales grow, and funding of up to €5 million is available with a minimum facility period of 24 months to access the lower SBCI-backed rates.
Leasing and Hire Purchase
Leasing and Hire Purchase covers asset finance for things like vehicles, plant, and machinery, delivered through Fexco Asset Finance and SME Finance & Leasing Solutions. It spans a few structures – straightforward leasing, hire purchase (where ownership transfers at the end of the term for a nominal sum), contract hire for vehicles, and rental agreements for office equipment – with terms typically running two to five years (letting a business get the use of an asset without tying up cash flow to buy it outright).
Apply for a loan through an SBCI scheme
I believe that access to funds should be a straightforward matter for any financially healthy SME, and SBCI goes a long way to making that a reality. If innovation, change, and growth are part of your plans, you should take a closer look at their schemes. I recommend you start by working on a business plan to clarify what you want to do and how much funding you’ll need (as a business plan will be required for almost any loan application, it’s the ideal first step).
The more prepared you are going into a financing situation like this, the better. We no longer have personal relationships with our bank managers, so it’s on you as the business owner or financial director to build such relationships elsewhere – like working closely with an accountant. SBCI reports that there is a huge difference in the quality of applications between those companies that are working with a financial advisor and those that aren’t, and that this impacts the chances of an application going through.
We regularly work with clients who are raising funding and can offer help with choosing the right funding strategy to pursue as well as preparing for applications or pitches. To find out more, get in touch today!
Rory
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